In the past, producers acted as limited participants or nonparticipants in gas storage and marketing, primarily because of the corporate culture that per­vades most major players that categorize their primary business as explora­tion and production (E&P). The E&P cultural issue is compounded by the fact that storage operators rarely earn more than a 15% return on after-tax equity employed, and E&P firms believe that their projects should have much higher hurdle rates to accept the high failure rate encountered in the drilling business. A few producers are examining storage as an adjunct to developing affiliate marketing organizations. Producers are now beginning to see some value in balancing, emergency back-up for warranty gas sales, and replacement sales volumes when platform production is interrupted by hurricanes or other factors.

Updated: September 29, 2015 — 9:50 am