Course 10 of 20 · Natural Gas Desk Academy

Storage Commercial Economics

Stage C, Spread, storage and cash economics. Level 5 of 10.

Valuing a storage right through intrinsic and extrinsic spread capture, injection and withdrawal ratchets, and cycling economics.

118 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 04, Course 06, Course 09

Enrol or enquire See the 118 chapters
How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 118 chapters

Open any module for its full chapter list, in teaching order.

M0 The Storage Right as a Commercial Object Ch 1-10
  1. What You Own When You Own Storage
  2. Why Storage Exists Between a Flat Supply and a Swinging Demand
  3. Storage Moves Gas Through Time, Not Through Space
  4. The Three Numbers That Define Any Storage Right
  5. Who Holds Storage and What Each Holder Wants From It
  6. The Storage Operator, the Storage Customer and the Line Between Them
  7. Where the Money in a Storage Right Actually Sits
  8. Storage Flexibility Against Contractual Swing
  9. Inventory You Value Against Inventory You Read
  10. What This Course Builds and Where Threads Resume
M1 Facility Types and the Commercial Meaning of Physics Ch 11-21
  1. Depleted Reservoir Storage and Its Commercial Signature
  2. Aquifer Storage and the Cost of Uncertainty
  3. Salt Cavern Storage and the Premium on Speed
  4. Peak-Shaving Tanks and Liquefied Local Supply
  5. Line Pack as Accidental Storage
  6. Deliverability per Unit of Space as the One Comparable Number
  7. Why Geology Sets the Shape of the Rate Curve
  8. Wells, Compression and Surface Plant as Hard Rate Limits
  9. Fuel Gas and Shrinkage: the Volume That Never Comes Back
  10. Maintenance Windows and the Capacity You Cannot Use
  11. Matching a Facility Type to a Commercial Need
M2 The Storage Contract and What It Grants Ch 22-32
  1. Firm Storage Service and the Limits of the Word Firm
  2. Maximum Storage Quantity: Buying Space
  3. Maximum Daily Injection Quantity as a Purchased Rate
  4. Maximum Daily Withdrawal Quantity and the Peak Day Promise
  5. The Reservation Charge and What It Buys
  6. Variable Charges, Fuel Retention and In-Kind Deductions
  7. Mandatory Injection and End-of-Season Inventory Covenants
  8. Interruptible and Non-Firm Storage Service
  9. Overrun, Penalty and Inventory Imbalance Provisions
  10. Title and Risk of Loss While Gas Sits Underground
  11. Reading an Unfamiliar Storage Agreement in One Pass
M3 Ratchets, Working Gas and Cushion Gas Ch 33-42
  1. Working Gas and Cushion Gas Separated
  2. Why Cushion Gas Is Capital Rather Than Inventory
  3. The Injection Ratchet: Fill Rate Falls as Space Fills
  4. The Withdrawal Ratchet: Deliverability Falls as Inventory Empties
  5. Reading a Ratchet Table
  6. Why Ratchets Bind Exactly When the Gas Is Wanted
  7. Days to Fill and Days to Empty
  8. The Effective Space a Ratchet Leaves You
  9. Ratchets and the Obligation to Deliver on the Coldest Day
  10. A Worked Ratcheted Withdrawal Season
M4 The Seasonal Spread and Intrinsic Value Ch 43-54
  1. The Summer to Winter Spread as the Price of Time
  2. Where the Seasonal Shape of the Curve Comes From
  3. Reading a Forward Curve as a Menu of Storage Trades
  4. The Intrinsic Value Idea
  5. Building the Simple One-Cycle Intrinsic Calculation
  6. Intrinsic Value With Flat Rate Limits Applied
  7. Intrinsic Value With the Ratchets Switched On
  8. Putting Fuel, Charges and Losses Inside the Number
  9. The Schedule the Intrinsic Calculation Hands You
  10. A Full Intrinsic Valuation, Part One: Setting It Up
  11. A Full Intrinsic Valuation, Part Two: Solving and Reading It
  12. What the Intrinsic Number Promises and What It Does Not
M5 Breakeven and the Spread Threshold Ch 55-64
  1. The Breakeven Spread a Storage Right Must Clear
  2. Assembling the All-In Cost of One Storage Cycle
  3. Carry Cost: What It Costs for Gas to Sit Still
  4. Costs That Only Appear When the Gas Moves
  5. Comparing Breakeven to the Quoted Seasonal Spread
  6. Locking the Spread the Day You Sign
  7. The Decision Not to Fill
  8. Breakeven for a Right You Have Already Paid For
  9. A Worked Breakeven Across Three Facilities
  10. When Breakeven Is the Wrong Question
M6 Extrinsic Value and Rolling Intrinsic Ch 65-76
  1. Why a Storage Right Is Worth More Than Its Intrinsic Value
  2. Optionality as the Source of the Extra Value
  3. What Makes the Extrinsic Component Large or Small
  4. Space and Rate as Two Different Options
  5. Rolling Intrinsic: Revaluing the Plan as the Curve Moves
  6. A Rolling Intrinsic Cycle, Part One: The Reoptimisation Step
  7. A Rolling Intrinsic Cycle, Part Two: Capturing the Reset
  8. The Rebalancing Trades Rolling Intrinsic Generates
  9. Rolling Intrinsic Through a Realised Season
  10. Why Rolling Intrinsic Still Understates the Right
  11. Spread Instability Without Reaching for a Model
  12. Reporting Intrinsic, Rolling and Mark-to-Market Together
M7 Cycling and Multi-Cycle Economics Ch 77-86
  1. What a Cycle Is and How It Gets Counted
  2. Single-Cycle and High-Cycle Facilities Compared
  3. Earning the Spread More Than Once
  4. The Rate Constraint That Caps How Often You Turn
  5. Why High-Cycle Space Costs More per Unit
  6. Intra-Season and Month-Ahead Spreads for Fast Space
  7. A Cavern and a Depleted Field Valued Side by Side
  8. Contractual Cycle Limits and How They Are Policed
  9. A Worked Multi-Cycle Valuation
  10. When Extra Cycles Earn Nothing
M8 The Inventory Trajectory as a Plan Ch 87-96
  1. The Inventory Trajectory as a Commercial Commitment
  2. Building the Target Path From the Optimal Schedule
  3. Constraints the Trajectory Has to Respect
  4. Reading the Gap Between Plan and Actual
  5. Rebalancing Without Destroying the Spread You Locked
  6. The Cost of Running Behind on Injection
  7. The Cost of Running Ahead on Withdrawal
  8. End-of-Season Inventory and the Carry-Out Decision
  9. The Same Right Through a Warm Winter and a Cold One
  10. A Worked Trajectory Rebalance
M9 Short-Term Products and Synthetic Storage Ch 97-107
  1. Park and Loan Service Explained
  2. Pricing a Park
  3. Pricing a Loan
  4. Park and Loan Alongside a Seasonal Right
  5. Monthly and Within-Season Storage Products
  6. Lease, Tolling and Managed Storage Arrangements
  7. Virtual Storage Sold by a Counterparty
  8. Building Storage Out of Paper Spreads
  9. Balancing Services as Storage Under Another Name
  10. Title Tracking and Inventory Held at Another Party
  11. Choosing Between Physical Space and a Synthetic Alternative
M10 Bidding, Procurement and the Integrated Case Ch 108-118
  1. How Storage Capacity Reaches the Market
  2. Turning a Valuation Into a Bid Number
  3. Why You Bid Below Your Own Valuation
  4. Bidding for Rate Separately From Space
  5. Multi-Year Bids Beyond the Liquid Curve
  6. Bidding With a Known Obligation Behind You
  7. Auction Formats and Award Rules
  8. Reviewing a Won Right After the Season
  9. An Integrated Case, Part One: Valuing the Right
  10. An Integrated Case, Part Two: Running the Season
  11. What Storage Valuation Cannot Tell You

The brochure gives each of these 118 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 10 of twenty

It stands alone, and it is also the entry point to the Natural Gas Desk Academy pathway.

Enrol or enquire See the whole pathway