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WTM speaks at the Platts 2017 Gas Storage Outlook Conference
Written by Dr. Parsons   
13 January 2017

  • • Seasonal spreads are historically low, storage operator demand charges are taking a big hit because of it, but with low spreads comes high extrinsic value for storage.  Storage operators, who sell firm leases and collect close to what the seasonal spread is, need to go after that high extrinsic value.

  • • WTM estimates the extrinsic value now to be almost three times intrinsic value for Gulf, slow-turn storage with standard charges, which is a lot of value to pass up.  At the conference WTM discussed the two major ways operators can collect that extra value along with the pros and cons of each way:
  1. The first way is by parking and loaning, but operators must be prepared to park or loan cash to an outer month every day.  Parking and loaning an outer month to another outer month won’t collect that immense extrinsic value.

  2. The second way is to form a trading shop to trade the operator’s storage.  Again, one must be prepared to inject or withdraw every day at spot prices to collect that immense extrinsic value.  Conventional storage trading where monthly injecting or withdrawing is done will not collect that value.

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