Natural gas storage is an attractive business that offers consistent profits under most market scenarios. When prices are low, the reduced cost of credit allows reasonable returns on deployed capital. When prices are high, increased volatility offers higher extrinsic value and contributes to profitability. When coupled with: marketing and trading capabilities; counterparty relationships; and superior systems, people and processes; optimization of storage can offer superior risk-adjusted returns on capital. By working with Moneta, E&P Companies can unlock additional value from existing assets:
- Partner with Moneta to develop depleted reservoirs into natural gas storage assets
- Sell depleted reservoirs for fair value plus option on upside associated with storage development
- Partner with Moneta to convert depleted reservoirs for proprietary gas storage to be used during times when gas prices are depressed
In order to extract value from natural gas storage development, top notch technical skills such as reservoir engineering and facilities design, along with best-in-class commercial optimization is required. Moneta is able to capture the full value of natural gas storage over the development cycle. Elements of our strategy include:
- Investigation and development of green field and brown field storage assets.
- Our marketing and trading services offer the opportunity to lease storage capacity from other operators when it is economically attractive.
- We will acquire existing storage operations as opportunities arise.
- We support both proprietary monetization and contracting storage capacity based on our own and leased facilities.
We expect demand for storage capacity in North America to increase by 600 Bcf by 2025. This increasing demand is driven by (1) higher seasonality of demand; (2) increasing operating leverage at natural gas producing projects as unconventional supply increases; and (3) increasing counter cyclical flow of LNG, which predominantly lands during the summer months.
On the marketing front, physical and financial marketers and traders have reduced their operations due to tighter credit, largely related to the banking crisis in the U.S. We expect both higher margins and market share for Moneta by back filling exiting marketers.
Alongside these positive market fundamentals, Moneta has a competitive advantage in developing and monetizing storage facilities. Our team includes experienced gas marketers as well as engineering expertise in storage: a unique combination of diverse skill sets. This creative, yet focused team dynamic yields new business models such as the microStorage concept, which allows producers to store natural gas in their own reservoirs at less than their F&D costs.