Larry Bickle, Managing Director of Haddington Ventures
Mark Hand is senior editor at Public Utilities Fortnightly.
What does Haddington Ventures find appealing about investing in storage?
When you deregulate an industry, generally what you get over time periods is lower average prices but higher volatility in the commodity price. The second step in the logic is higher volatility implies more value for storage because there are more opportunities to buy low and more opportunities to sell high. That's the value proposition of why we like storage.
In what types of storage does Haddington like to invest?
We're not developing any traditional reservoirs. Lodi is a reservoir but a very unusual reservoir, very similar in its geologic properties to Michigan reef play. The focus point for us is not so much salt versus traditional, as it is very high turnover storage facilities where you can take all of the gas out in 10 to 20 days.
If you think of a storage asset, it has the most value when you trade around it, when you integrate it with a large trading book. We at Haddington don't like and don't engage in trading. If you think of a value of an asset, what we have is the intellectual ability to figure out where the storage ought to be located, to identify the correct geology, to take it through the permitting process. We're very good at constructing storage facilities. Once it's up and in operation, it has its most value in the hands of someone who has a combination paper and physical trading book. That's not us because we don't have a paper‑trading book.