Oct 20 A novel U.S. natural gas venture launched by former Morgan Stanley trading executives has secured its first major deal, allowing it to capitalize on seasonal supply shortages in pockets of the Northeast.
A large oil and gas company has agreed to buy as much as 90 billion cubic feet of compressed natural gas over five years, the new company, Pentagon Energy, said in a statement. The gas will be shipped by truck from a CNG station in the heart of the Marcellus shale gas field to power plants across the Northeast. Pentagon declined to name the buyer of the gas.
The project, involving the nation’s largest gas compressing station and specially designed trucks for hauling it up to hundreds of miles, is meant to capitalize on the abrupt supply shortages and price spikes that can arise in the region due to a lack of pipeline capacity to meet peak winter demand.
Pentagon plans to build several more so-called mother stations that will provide CNG to locations that “experience gas shortages or lack the infrastructure to receive gas.”
Coral Gables, Florida-based Pentagon was formed earlier this year from the acquisition of Wentworth, Morgan Stanley’s compressed natural gas business. The bank came under pressure from regulators to exit its physical commodities businesses, including Wentworth. Morgan Stanley also sold its physical oil business to Castleton Commodities International in May.
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