The product would require players interested in baseload and swing gas to take delivery of supplies at major market pools and storage facilities. The first storage facility to be offered would be Houston-based Pivotal Energy Development's Jefferson Island Storage Hub in Louisiana's Iberia parish, CME
Group said in June when it announced the product.
But Pivotal Vice President Ed Gottlob said at a luncheon Thursday in Houston that all issues have not yet been settled.
"We are still in negotiations with CME," Gottlob said. "It's a complex agreement."
Pivotal has been asked by CME to be a third-party guarantor for the physical assets at the point, Gottlob said, and the company continues to assess its role in the agreement.
"The question we're asking is, 'How much risk should we take on as a facilitator of the agreement?'" Gottlob said.
The physical futures product will allow physical market players to trade day-ahead, balance-of-the-month and prompt-month gas, removing the financially-settled component, through their current futures accounts on the exchange.
Pivotal's Jefferson Island facility was chosen because of its proximity to benchmark Henry Hub.
At the LDC Northeast Forum in June, CME consultant Patrick McKinnon said other locations to be included in the product are Natural Gas Pipeline Co. of America's Tex-ok and Panhandle Eastern Pipe Line.
McKinnon said other markets would be evaluated once CME built a base of Gulf locations for the product.
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