By Christian Berthelsen And Justin Baer
Morgan Stanley is considering an exit from its planned natural
gas exporting project or bringing in a partner to run it, according
to people familiar with the matter.
The project would export up to 60 billion cubic feet a year of
compressed natural gas over a 20-year period. Natural gas prices
are lower in the U.S. than overseas due to booming domestic
production. By selling gas compressed in canisters, Morgan Stanley
hoped to sidestep costly infrastructure and legal issues that have
plagued proposals to export gas in liquefied form.
Morgan Stanley filed an application with the Energy Department
in May under the name of a subsidiary, Wentworth Gas Marketing.
At this stage, the venture is still in little more than proposal
stage. Morgan Stanley has sought space to build a container and
loading facility near Freeport, Texas, and has some construction
agreements, according to a person with knowledge of its plans. But
it has no contracts to supply customers, no containers or
infrastructure and no contracts to transport the gas.
High capital costs, questions over the long-term strategic fit
of the business and concerns from U.S. banking regulators over
Morgan Stanley's role in physical commodity markets led to the
decision to sell it or seek an outside operator, the people said.
News of the decision was reported earlier by the Financial
Times.
Write to Christian Berthelsen at christian.berthelsen@wsj.com
and Justin Baer at justin.baer@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires