By Richard Page

Inventory Adjustments in Endur Gas Storage contract modelling

In recent versions of Endur, there are two additional physical leg types that provide flexibility to augment the existing Injection and Withdrawal leg types in order to capture gas storage inventory changes.

When looking to capture a storage contact in Endur, using the default COMM-STOR instrument type, the leg layout is shown below (assuming sub-type Deal Phys Balance is selected, and Pricing Level is Location).

NB: Each Leg represents a Physical and Financial pair

Here we see the Inj, Wth, and Balance legs, and this is a typical setup for traditional storage deal capture in Endur – in fact the Balance leg is also only a relatively recent addition.

In this setup, it is normal to attach one or more Fees to the Inj and Wth legs that represent the actual cost per unit of withdrawing and injecting gas at the relevant storage facility. A potential drawback arises when looking to capture an inventory adjustment as it should not normally incur a cost.

This is where the two additional leg types provide a mechanism to make adjustments to the storage inventory without having to capture injection or withdrawal activity.

The leg types are ‘Pos Adj’ and ‘Neg Adj’, and are shown below together with the other legs.

NB: Each Leg represents a Physical and Financial pair

Adding these as additional legs on the storage deal essentially enables the capture of changes to the inventory, such as a gas-in-store purchase or sale. These require changes to the inventory but (usually) do not invoke any injection or withdrawal costs. The capture of a volume on one of these legs will cause a change to the overall storage deal Balance, and therefore, as with the normal injection and withdrawal activity, allow inventory and costs to be tracked correctly.