The Arizona Natural Gas Storage Lease refers to a legally binding agreement between a lessor (landowner or company) and a lessee (gas storage company) for the exclusive right to store natural gas in underground storage reservoirs located in Arizona. This lease agreement grants the lessee the authority to extract, inject, store, and withdraw natural gas from the designated underground storage facility, subject to the terms and conditions outlined in the contract. Keywords: Arizona natural gas storage lease, underground storage reservoirs, natural gas, lease agreement, lessor, lessee, extract, inject, store, withdraw, terms and conditions. There are different types of Arizona Natural Gas Storage Leases available, each serving specific purposes. These include: 1. Depleted Reservoir Storage Lease: This type of lease involves utilizing depleted natural gas reservoirs that were previously exploited for production purposes. These reservoirs have shown the potential to store natural gas due to their geologic characteristics, making them suitable for storage operations. 2. Aquifer Storage Lease: Aquifer storage leases involve using underground rock formations or porous aquifers to store natural gas. These underground formations possess the ability to retain natural gas due to their permeability and porosity, providing a reliable storage option. 3. Salt Cavern Storage Lease: Salt cavern storage leases involve the use of naturally occurring salt formations that form caverns underground. These caverns are highly reliable and offer excellent storage capacity due to their impermeability and stability, making them ideal for natural gas storage. 4. Enhanced Gas Recovery (EAR) Lease: EAR leases involve injecting natural gas into non-producing natural gas reservoirs to enhance the recovery of remaining resources while providing storage capabilities. This type of lease allows for the dual use of reservoirs, benefiting both storage operations and future production. Each type of Arizona Natural Gas Storage Lease has its advantages and considerations, which are tailored to meet specific industry requirements and geological conditions. Keywords: Depleted reservoir storage lease, aquifer storage lease, salt cavern storage lease, enhanced gas recovery lease, natural gas reservoirs, geologic characteristics, underground rock formations, porous aquifers, salt formations, impermeability, stability, storage capacity.
Arizona Natural Gas Storage Lease
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It is most commonly held in inventory underground under pressure in three types of facilities. These underground facilities are depleted reservoirs in oil and/or natural gas fields, aquifers, and salt cavern formations. Natural gas is also stored in liquid or gaseous form in above?ground tanks.
Depleted natural gas or oil fields function as gas storage reservoirs in California. Natural gas is injected into the storage reservoirs through gas storage wells and stored until withdrawn for use. There are 12 underground natural gas storage fields in the state.
This is achieved by taking all currently tradeable contracts and determining all possible combinations of pairs of feasible contracts (ie injection months occur before withdrawal months). Each of these pairs is valued as a CSO using the pairs' forward prices, volatilities and the correlation between them.
Natural gas, like most other commodities, can be stored for an indefinite period of time. The exploration, production, and transportation of natural gas takes time, and the natural gas that reaches its destination is not always needed right away, so it is injected into underground storage facilities.
Deliverability is most often expressed as a measure of the amount of gas that can be delivered (withdrawn) from a storage facility on a daily basis. Also referred to as the deliverability rate, withdrawal rate, or withdrawal capacity, deliverability is usually expressed in terms of million cubic feet per day (MMcf/d).
The basic approach to storage valuation is to calculate the optimal position given the available forward curve and take this position on the forward market. This intrinsic value approach captures the predictable seasonal pattern in gas prices and secures a sure profit.
Natural gas prices are a function of market supply and demand. Increases in natural gas supply generally result in lower natural gas prices, and decreases in supply tend to lead to higher prices. Increases in demand generally lead to higher prices, and decreases in demand tend to lead to lower prices.
The market part of the storage value has two components: intrinsic and extrinsic value. While intrinsic value is a static view of the forward curve, extrinsic value is a complex function of the seasonal spread, spot price volatility, forward spread volatility, asset flexibility and individual optimisation strategies.