Natural Gas Distribution & Marketing

Natural Gas Distribution & Marketing

Brief Excerpt from Industry Overview Chapter:

Companies in this industry operate natural gas distribution systems that serve customer locations, broker the sale of gas to distributors, and buy natural gas and directly distribute it to customers. Major companies include CenterPoint Energy, NiSource, and Sempra Energy (all based in the US); Centrica (the UK); Engie (France); GasTerra (the Netherlands); Gazprom (Russia); and Naturgy (Spain); as well as the natural gas distribution subsidiaries of US companies such as Dominion Energy and Duke Energy.

COMPETITIVE LANDSCAPE

Demand for natural gas is driven by energy use, which in turn is influenced by overall economic activity. The profitability of natural gas distributors depends largely on the efficiency of their operations, because prices typically are fixed by public utility commissions (PUCs). Companies that operate multiple distribution networks may enjoy economies of scale in purchasing. Small companies can compete effectively through a strong regional presence. The US industry is highly concentrated: the 50 largest companies account for about 90% of revenue.

PRODUCTS, OPERATIONS & TECHNOLOGY

Natural gas distribution and support services accounts for about 60% of industry revenue, while power marketing and brokering accounts for about 40%.