Summit Gulf Venture Acquires 10 Oil and Natural Gas Fields
in the Gulf of Mexico
New investment provides a steady supply source; bolsters Pacific
Summit Energy natural gas marketing efforts
Sumitomo Corporation of America (SCOA) has made moves in the past
10 months to become a major player in the North American natural
gas marketing and trading business.
It began last year with the formation of Pacific Summit Energy
LLC, a natural gas aggregator/trader/marketer with offices in California
and Texas. A subsidiary of Sumitomo Corporation (SC) and SCOA, Pacific
Summit Energy currently offers natural gas marketing and trading
services in the western U.S. Their future plans include the ability
to offer their capabilities to the rest of the United States.
And earlier this year, Summit Gulf Venture LLC acquired 10 oil
and natural gas fields in the Gulf of Mexico. Summit Gulf Venture
LLC is owned by SCOA and Petro Summit Investment USA Corporation,
whose parent company Petro Summit Investment Corporation, a SC subsidiary,
has interests in other companies with oil and natural gas wells
in the North Sea
“SCOA’s investment in Pacific Summit Energy LLC (PSE)
and Summit Gulf Venture LLC (SGV) is the continuing evolution of
SCOA’s natural gas business as SGV now has the capacity to
produce, and PSE has the ability to market the gas,” said
Yoshihiko Hori, the chairman of both Pacific Summit Energy and Summit
Gulf Venture, who has led SCOA’s expanding presence in the
natural gas business.
The ability to be both a producer with Summit Gulf Venture and
a marketer through Pacific Summit Energy gives SGV and PSE important
standing in the industry, according to Brian Mock, president of
Pacific Summit Energy.
“It shows potential customers a commitment to the business,
that you have your own physical supply and hard assets to trade,”
explained Mr. Mock. “It is a great entrée to a relationship
with other natural gas producers. And utilities always want secure,
multiple sources that they can get their natural gas supply from
and we provide that capability.”
PSE +SGV
The natural gas market in California has been receptive to Pacific
Summit Energy. Within days of startup, they had qualified and transacted
with the largest gas distribution utility in the U.S., SoCal Gas,
which serves the most populous part of California. PSE has also
transacted with every natural gas and electric generation utility
in the state as well as the largest municipal utilities.
Mr. Mock attributes this early acceptance to the reputation and
credit worthiness of Sumitomo Corporation and SCOA, and the top
management at PSE, who average more than twenty years of natural
gas marketing and trading experience.
Pacific Summit Energy is currently focused is on natural gas supply
aggregation and directly marketing to utilities and end-user customers.
As it has since last year, Pacific Summit Energy will continue to
buy from a variety of sources, but Summit Gulf Venture will now
provide a stable supply source.
When selling natural gas, Pacific Summit Energy targets four types
of customers: electric generators, gas distributors, industrial
end users and commercial customers like large office buildings.
Their earliest acceptance has been with utilities that seek multiple
supply sources. For the industrial end-use customer, who often has
a one-on-one exclusive contract with their natural gas provider,
PSE expects a longer sales cycle. But the market position they are
staking out now, as both a producer and a marketer, will make them
attractive to this group.
NATURAL GAS: DEMAND BEGINS TO OUTSTRIP SUPPLY
“It used to be the U.S. could satisfy all their natural gas
needs with Canadian and domestic supply. But right now the U.S.
needs to import about 5 percent of their natural gas and in the
future that will likely increase,” explained Mr. Mock.
This increased demand is being fueled by utilities and businesses
switching from traditional sources of energy like coal and oil to
natural gas, along with the growth of the U.S. economy.
“PSE is located in California because this is where natural
gas deregulation began. Demand is high and generators and manufacturers
want to use the cleaner burning natural gas. California’s
daily demand for natural gas is 6.5 billion cubic feet, approximately
the same as Japan,” said Mr. Mock.
The trading of natural gas on a global scale is made possible by
Liquefied Natural Gas (LNG). There are currently 40 LNG terminals
worldwide that aided by scores of new specially designed ships allow
the transport of natural gas from the remote regions where it is
often acquired to pipelines that serve demand centers.
Sumitomo Corporation holds a 50% percent stake in one of Japan’s
largest LNG importers, LNG Japan Corporation, who has 30 years of
experience in LNG trading and transport. Because Japan has imported
natural gas for many years and Japanese utilities have made the
transition from oil and coal to natural gas, Japan is now home to
highest concentration of LNG terminals in the world and account
for approximately 50 percent of LNG global demand.
“At that level, with the large amount of capital needed,
assets like terminals and ships and the knowledge to conduct the
natural gas trading and transport, there are very few global player,"
said Mr. Mock "SC has that extensive, practical experience
trading LNG and can help PSE meet the increasing natural gas demands
of our customers in the future."
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