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Subject: vince and vasant : | |
here is a brief summary of my meeting with chris germany , capacity trader at | |
the east desk , related to gas transmission : | |
typically , pipelines lease capacity billed on a monthly basis . an example | |
might be the pipeline between south texas and brooklyn , where you might pay | |
$ 12 . 00 per month per 10 , 000 decatherms of capacity ( $ 0 . 40 per day ) , a fixed | |
payment . variable charges are 6 % for fuel costs ( " shrinkage " ) and 6 . 5 % for | |
overhead expenses . a gas trader might call south texas and be quoted a | |
delivery price tomorrow of nymex - $ 0 . 10 ( " basis " ) , and might call brooklyn | |
and be quoted a delivered price of nymex + $ 0 . 25 . the trader ' s spread is | |
$ 0 . 35 , and variable costs of transmission are $ 0 . 125 , so the trader would | |
offer the leaseholder of capacity up to $ 0 . 225 for firm capacity tomorrow . | |
as for the distinction betweem firm and interruptible , the leaseholders have | |
an excellent knowledge of the firm - equivalent of interruptible capacity . | |
also , many pipelines don ' t discount firm capacity from the tariff maximum | |
( " it ' s not worth their time to haggle " ) ( there is a further issue of | |
" secondary markets " not important to the model yet ) . for south texas and | |
brooklyn , there are several different routes the gas can physically take | |
( pipelines of enron , texas eastern , etc ) . and , once the trade is in the | |
system traders can cover the ( enron ) positions on each end of the pipeline , | |
in so doing freeing up the capacity for other contracts . | |
clayton |