FERC Regulated Natural Gas Storage and Transportation

Commercial value

Respond to changing market conditions: choose when to offer capacity and how much to offer, within the applicable notice requirements.
Discover the market price: let competing bids reveal what customers will pay for the capacity offered, rather than relying only on a modeled value.
Allocate capacity across customers: use a defined bidding and allocation process to determine each successful bidder’s award.
See market demand: capture individual and aggregate demand curves showing the quantities customers request at successive prices.
Document the process: retain detailed bidding and award records, with an audit trail that supports transparent review.

Natural gas storage

Firm natural gas storage — storage quantity, contract term, receipt and delivery rights, and daily injection and withdrawal limits.
Interruptible natural gas storage — interruptible service with defined flow limits and charging conditions, including use-dependent billing where specified.
Storage with firm transportation — storage service with specified transportation connections and flow capabilities.
Repeated storage offerings — offer capacity through a series, choosing the quantity for each event within the published terms and notice requirements.

Maximum Storage Quantity (MSQ) is stated in Dth, with daily injection and withdrawal limits in Dth/day. The offering defines the storage rate and billing period, separate charges and end-of-term inventory obligations.

For a Level 1 storage offering, bidders state how much capacity they want at the announced price. Their responses reveal demand for the offering and determine its allocation under the auction rules.

Storage case auction design — Level 1: One Product ↗

Historical natural gas storage case

Results, 2012–2022

A major US natural gas storage company used auctions to price and allocate its offered capacity. Bidders could receive different quantities, with successful awards made at a common price. The bidding record revealed individual and aggregate demand, and how demand changed with price.

From 2012 to 2022, this client recorded the following results:

$18.69 million in additional revenue above modeled predicted value.
128 bidding events.
Four minutes average bidding duration.

These figures describe this customer's historical results. They are not a forecast for another offering.

Read the natural gas storage case study ↗

Natural gas transportation

Pipeline transportation capacity — firm transportation (FTS) and interruptible transportation (ITS), with a defined primary path, Maximum Daily Quantity (MDQ), contract term, point flexibility and service priority.
Seasonal transportation capacity — service during specified months, including recurring seasonal terms.
Right of first refusal (ROFR) — a design for comparing rate, term and volume within the applicable ROFR process.
Discounted firm transportation — a design for comparing rate and volume over a fixed term.
Contract term extensions — a design for comparing term and volume at a fixed price.
Gas parking — a defined parking quantity, daily limits and payback schedule. Parking and loaning (PAL) have their own service terms.

For the firm transportation example, the price being bid is the daily base reservation rate in $/Dth/day, subject to the applicable maximum tariff rate. Fuel and loss charges, surcharges and optional-service charges are assessed separately under the tariff.

The offering must define participant eligibility and reflect the applicable transportation rights and operating constraints.

Stored gas sales and supply

Stored-gas sales — gas held in storage, with defined possession, transfer and withdrawal arrangements.
Natural gas procurement — supplier offers for a specified quantity, delivery location and period.
Daily-call gas supply — a firm supply commitment with MDQ and daily call rights. The demand fee is separate from the indexed payment for gas delivered.

These offerings trade gas or supply commitments rather than storage or transportation capacity rights.

Design concepts

Storage procurement for peak-day reliability — compare storage inventory and withdrawal capability.
Combined transportation and storage bids — bidders could combine transportation and storage quantities in one bid.
Gas procurement for combined heat and power — a plant could specify how much gas it needs each month and separate the cost of the gas from the cost of delivery.