This course focuses on deal structuring opportunities that are relevant specifically to the natural gas markets.  Participants will learn to identify market opportunities that arise from the economic inter-relationships between the physical operations (i.e. pipeline, storage, generation/tolling, etc.) and their synthetic financial counterparts (i.e. basis, time spread and multi-fuel derivatives). 

Because this course deals with sophisticated products and deal concepts, participants need to be familiar with the basic concepts of both the gas industry and derivatives.  Applied Energy Derivatives or its equivalent is a prerequisite for this program; no other advanced preparation is required. 

At the conclusion of this course, participants will be able to: 

ü      Conceptualize the relationship between basis and pipeline capacity.

ü      Identify and value optionality in storage and pipeline capacity.

ü      Price and quote basis swaps and spreads.

ü      Structure a trigger to separate price risk from location risk.

ü      Trade and price inter-month and inter-seasonal spreads.

ü      Separate price from physical risk for pipeline and storage operators.

ü      Use “stack and roll” hedging to manage stored gas.

ü      Arbitrage storage costs and create synthetic storage.

ü      Use swing swaps/options to manage short-term storage and transport risks.

ü      Evaluate opportunities in Park-and-Loan programs.

ü      Differentiate among NYMEX settlements, delivery, paper hedging and EFPs. 

ü      Sell gas by wire through tolling, directly or synthetically.

ü      Structure and price a spark spread swap.

ü      Use a generator’s heat rate to sell gas indexed to power.

ü      Offer dispatch/tolling options to gas-fired generators.

CPE Credits earned are:

Accounting & Auditing – 2

Consulting Services – 1

Management – 1

Specialized Knowledge & Applications – 12