More on energy trading

OptionsTrader Bish Arjyal on the trading floor at Bear Energy. ( Melissa Phillip / Chronicle )

On Sunday we wrote about how energy trading is coming back in Houston with a vengeance, thanks in large part to the banks opening up trading shops here.
That’s not to say the producers aren’t still a big deal in town. Chevron, Shell, ConocoPhillips and BP still have huge staffs and are still growing. BP is also building a new 375,000 square foot building on its West Houston campus dedicated to trading that will meet top standards for energy efficiency and offer amenities for workers like a restaurant.
But the banks have really been the big story in 2007.
A few things that we either just touched on or didn’t mention in the piece:
Competition for workers is very intense. Just about every bank we talked to said they made hiring good managers in key positions a cornerstone to attracting good workers, but none would name their key people on the record. They’re too worried about them being poached by a competitor. You only need to visit SparkSpread to read the latest rumor on who’s jumping ship every day.
Lots of people had stories about how hard it was for them to come work in Houston at first, particularly back in the 1990s. One executive said he was impressed with his visit when he stayed in the Galleria, but after driving back to the airport along US 59 and “seeing all the billboards for vasectomies I told my wife, ‘I can’t work here’!” But he did. He credited the merchant energy companies like Dynegy, Enron and El Paso that dominated the trading scene back then with recognizing the need for Houston to compete with cities like Atlanta, L.A. and New York for workers.
These days it’s a lot harder getting people to move away from Houston for trading jobs or trading support, because of the cost of living, the bankers told us. And good luck trying to find oil and gas attorneys or accountants in NYC.
A few bits of data from the Options Group folks we didn’t have room for:

One way Sequent Energy holds onto workers: healthy snacks and beverages. ( Melissa Phillip / Chronicle )

* 2008 projections: We expect 550 commodity hires at banks and corporations for all of 2007 and 350 more in the first half of 2008, a 17% increase over the first half of 2007. Of the 550 hires, 2/3 of those hires were from banks (around 365). So we expect banks to hire 233 more commodity hires in the first half of 2008.
* Global commodity hiring rates are on pace to rise 33% over last year and investors are piling into the market. Thru September, there were 450 commodity hires at banks and corporations, from around 340 in 2006, over the same time period according to OGIU.
* In some cases, commodity traders have been pulled out of gardening leave and had their previous offers doubled and guaranteed for two years.
Total Compensation 2007 for certain managing director jobs:
Global Head, Trading: $10- $12MM
Head of Americas, Trading: $7- $9MM
Head of Europe, Trading: $7- $9MM
Head of Asia, Trading: $5- $6MM