Quote from Aaron:
How does one play a demand for NG storage? There's got to be great demand for more and more storage with this contango.
Ah, here, I'll answer my own question... There are three types of Nat Gas storage owners:
Interstate Pipeline Companies
Interstate pipeline companies rely heavily on underground storage to perform load balancing and system supply management on their long-haul transmission lines. FERC regulations though demand that these companies open up the remainder of their capacity not used for that purpose to third parties. Twenty-five interstate companies currently operate 172 underground natural gas storage facilities. In 2005, their facilities accounted for about 43 percent of overall storage deliverability and 55 percent of working gas capacity in the US. These operators include the Columbia Gas Transmission Company, Dominion Gas Transmission Company, The National Fuel Gas Supply Company, Natural Gas Pipeline of America, Texas Gas Transmission Company, Southern Star Central Pipeline Company, TransCanada Corporation.
Intrastate Pipeline Companies and Local Distribution Companies
Intrastate pipeline companies use storage facilities for operational balancing and system supply as well as to meet the energy demand of end-use customers. LDCs generally use gas from storage to serve customers directly. This group operates 148 underground storage sites and account for 40 percent of overall storage deliverability and 32 percent of working gas capacity in the US. These operators include Consumers Energy Company and the Northern Illinois Gas Company (NICOR), in the US and Enbridge and Union Gas in Canada.
Independent Storage Service Providers
The deregulation activity in the underground gas storage arena has attracted independent storage service providers to develop storage facilities. The capacity made available would then be leased to third-party customers such as marketers and electricity generators. It is expected that in the future, this group would take more market share, as more deregulation takes place. Currently in the US, this group accounts for 18 percent of overall storage deliverability and 13 percent of working gas capacity in the US.
Some of the companies mentioned are publicly traded, some are not. Spectra Energy (owner of Union Gas) and Enbridge look like promising investments.
Aaron Schindler
Schindler Trading
