Energy technology innovation of the year: NatGasHub.com

Energy Risk Awards 2020: Innovative application automates formerly painful and inefficient gas scheduling and nominations process

Jay Bhatty
Jay Bhatty

As a long-time trader of US natural gas at both energy firms and banks, Jay Bhatty, founder and chief executive of NatGasHub.com, was painfully aware of the inefficiencies involved in trading or moving gas around the complex network of pipelines covering the country.

As there are around 100 different US pipeline companies, each with separate websites, the process involved trawling through website after website to find information on availability and price. Gas nominations would then be hand-typed, sometimes multiple times, into spreadsheets, trade capture systems and onto each pipeline website.    

“There were days that I just wanted to pull my hair out, going to so many different websites and using different spreadsheets,” says Bhatty. “I thought: ‘there has to be a better way to do this!’ So, in 2016, I decided to quit my job and give it a shot.”

The result, launched in 2018, was NatGasHub.com, a single portal connecting 150 pipelines and automating the flow of information from the pipeline operator through to the gas shipper’s energy trading and risk management (ETRM) system.

“Behind the scenes, we connect companies with all of these pipelines. So, in a nutshell, it is logistics automation software,” says Bhatty. “We’ve eliminated all [the manual inputs], streamlining the whole process.”

There was clearly huge demand for such a system. There are now around 1,000 users that log on to NatGasHub.com weekly to connect with more than 150 pipelines, Bhatty says. These include some of the largest players in the physical and financial gas markets. At present, $100 million worth of nomination transactions are executed using the software every month.

Bhatty, who traded gas at companies including Enron, JP Morgan and Mercuria, likens NatGasHub.com to mainstream technology sector disruptors such as Hotels.com and Netflix. Users access one standard website for all pipelines. “We built a centralised portal, we became the middleman and all the transactions can flow through this one portal,” he says. “We build, manage and maintain the system, and [users] simply pay a subscription fee.”

After transferring gas nominations to the pipeline’s systems, NatGasHub.com retrieves the confirmed volumes from the pipeline and automatically pushes that data back to the shipper’s ETRM system. The software also enables firms to satisfy internal data security mandates because the process is encrypted to North American Energy Standards Board standards.

It is logistics automation software. We’ve eliminated all [the manual inputs], streamlining the whole process
Jay Bhatty, NatGasHub.com

Since the provider handles all of the infrastructure behind the system, energy companies can focus on their core business, Bhatty says. Otherwise, connecting with numerous pipelines or building and maintaining a proprietary tool to standardise the process with various websites can be time- and labour-intensive.

Bhatty believes approaching the problem as a trader rather than as a software provider was helpful.  “One of the elements that has made us successful is that we’ve always thought from traders’ and schedulers’ perspectives,” he says. “The software companies [in the energy space] are excellent, but they tend to come from a programmer’s perspective. When we talk to traders, it clicks immediately. They get our product and that has been the driver of our success.”

Bhatty’s insider knowledge has led to additional product launches targeting other market inefficiencies: tools to automate pipeline tariff changes and capacity releases.

“Our flagship product addressed one of the big pain points in the industry and then, once we had enough clients using our software, our second product tackled pipeline tariff automation,” he says. “All of the pipeline companies have lengthy legal documents for tariffs that somebody [at the trading company] has to read and manually upload to systems. So we automated that, as well as capacity releases.”

The latter solution addresses what Bhatty saw as a need for a central system to handle the secondary market for pipeline capacity. “This is a very manual and opaque process and our product actually makes it more of a tradable commodity,” he says.

Instead of traders having to monitor individual pipeline websites for capacity releases, the technology aggregates the information and automatically feeds it to users. “It’s like an Ice-style trading screen,” Bhatty says of the product. He adds that its user base overlaps somewhat with that of the nomination solution.

Having expanded its offering to address additional gas market needs, Bhatty says the firm could now expand into other piped commodity markets. And NatGasHub.com has already partnered with a major industry player to develop a similar solution for the oil market. “They will be our first customer on [the oil] side,” he says. “Our software can be applied to any commodity that moves through a pipeline – from oil to products and then even natural gas liquids.”

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