Strategic implications of the current surge of merger and alliance activity in the energy industry

The transformation that has taken place in Canada's natural gas industry since the 1985 deregulation was reviewed. The 1985 'Halloween Agreement' was pivotal in deregulating the wholesale gas commodity business and paved the way for a truly competitive market for natural gas in Canada. Results of deregulation have been significantly lower prices for natural gas and a tripling of the natural gas market in Canada. Currently, natural gas represents 31 per cent of total energy consumption in Canada and approximately 22 per cent in the United States. New suppliers and industry players have entered the market to widen the choice and competition of energy products and services. Apart from the competition that resulted from deregulation, the convergence of the gas and electricity industries was considered to have been the most significant development. Ramifications of the gas-electricity convergence were reviewed. While the final outcome of the convergence in terms of the number and size of the companies operating in the market will not be known for some time, the de facto globalization of the natural gas business by reason of its interplay and offplay in regional markets with other forms of energy, is a well known fact. Further convergence, such as oil/natural gas/electricity was predicted