April C. Murelio
As Altra Energy Technologies-an e-commerce solutions provider- aggressively expands, its growth not only bodes well for e-trading, but could move the industry off the grease board and onto the web.
“Our biggest competition is the phone, fax, and tradition,” said E. Russell Braziel, Altra`s chairman. “But once we can get the system jump started, liquidity feeds liquidity.”
To help serve up this volume feast, Altra recently made two key acquisitions-QuickTrade/QuickTrade Canada and Energy Imperium. The QuickTrade purchase joins North America`s two largest electronic energy trading platforms, creating a viable electronic forum for conducting physical transactions.
Through their combined public Internet and private networks, Houston-based Altra and QuickTrade facilitated about $6 billion worth of electricity and natural gas trades last year.
With more than 4,000 users around the world and three distribution centers in Australia, Europe and Latin America, Altra`s systems already handle more energy transactions than any other technology. And Braziel said he wants the combined platforms handling $10 billion by the end of this year.
“Our company can now cover all key trading locations,” Braziel said. “We`ve got the world`s largest electronic forum for conducting physical energy transactions, so I think we`re going to see tremendous liquidity.”
Operated before the purchase by affiliates of Dynegy, Sempra Energy and Nicor, Calgary-based QuickTrade`s gas trading system serves 400 wholesale traders and enables physical forward trading at more than 140 locations. Launched in 1994, QuickTrade followed with gas swaps capability and power trading in 1998, with major trading centers in the Midwest, Appalachian region, western U.S., and Alberta.
Also sent to market in 1994, Altra`s Streamline and Chalkboard gas systems combined serve more than 350 energy commodity traders throughout North America. Streamline`s major natural gas systems are in the Southwest and U.S. Gulf Coast, while most Chalkboard liquid fuel trading occurs at major NGL trading centers. Altra started trading power in July 1998.
From an operations and design perspective, the two systems-now being melded into one-are similar, with both providing real-time, anonymous, electronic trading platforms and clearing services for energy deliveries. They also offer client software and trading and brokering services through the Internet.
Although the Altra systems primarily used private intranets, all new gas and power products, which combine the Altra and QuickTrade/QuickTrade Canada systems, will be “100 percent Internet,” said David Hanson, Altra`s gas marketing vice president, and Brian Soutiere, formerly of QuickTrade and now Altra`s electronic trading services president.
“Full use of the Internet results in some significant cost savings,” Soutiere said. “Our users have high-speed connections, so trading directly on the Internet will only enhance their performance.”
Soutiere said the company took different paths for the new Altra gas and power products, which launched in April. Based on customer response and more robust liquidity, the new Altra gas system embraces the QuickTrade platform design.
Although Altra Power incorporates some QuickTrade features, like a summary screen that gives traders a review of the market position against their last trades, it primarily relies on Altra`s original system.
Scrolling further into the future, Hanson said Altra hopes to find electronic trading`s MECA, or Multi-Energy Commodity Application. “This system will bring all products into one platform. The screens will all have a similar look and feel, with everything simplified,” he said. “This represents all we`ve learned over the last five or six years.”
With its recent acquisition of Atlanta-based Energy Imperium, Altra can now add the missing pieces to this seamless, integrated system designed to take a trade from the floor and out the back door.
A provider of energy-related commodity trading and risk management software, Energy Imperium`s capabilities position Altra to offer e-trading, risk services and the integrated management of physical, administrative and financial transaction processes, including scheduling and accounting.
For example, Alliance pipeline-considered the largest interstate pipeline built in 15 years-recently licensed Altra`s web-based shipper interface and gas transportation management system (GTMS). Alliance, which will bring western Canadian natural gas into the Chicago area, plans to manage its contracting, capacity release, scheduling and invoicing with the Internet system.
Ricardo Medina, Energy Imperium`s founder and president, headed the Global Derivatives and Trading Systems Group at Enron Capital before launching the software venture in 1995. Joseph Pokalsky, Imperium`s chief operating officer, took Southern Company Energy Marketing from 26th to 2nd in the power market rankings and created Southern`s energy asset management and energy financial services businesses.
Hanson said Altra plans to take incremental steps toward fully implementing Energy Imperium`s risk management system into its power and gas platforms until a new product launch expected by the end of this year.
“People continue to become comfortable with this way of doing business,” he said. “The marketplace will finally derive full value from electronic trading.”