 Another part of the logistical path for natural gas from the well to the burner tip and also a part of the value chain is natural gas storage. Natural gas can in fact be stored. Here's just a cutaway of what a underground storage facility might look like. As you can kind of see here, this is actually a normal natural gas type of well that we're going to use to put gas back in the ground. So the types we have, the first and foremost really is depleted oil and gas reservoir. If you think about it, there was natural gas drawn out of this well and now the well has depleted, gas can no longer be extracted. So it makes for a perfect storage facility. You're just going to put gas back in it from a pipeline source. We need to know what the characteristics are, what was the capacity of it. In other words, what was the capacity of this old well that we're going to use. And then some basically reservoir type terminology, the permeability and the porosity. Those factors will equate to the deliverability of the well. So depending on how permeable the formation is and the porosity in terms of how much hydrocarbon can be maintained in the formation, those together are going to let us know the deliverability. How much gas can we pull out of storage when we need to? And the questions become in terms of injecting the gas and that's the term we use when we put gas in a storage facility is injection. Can it free flow? In other words, if the gas you're pulling off of a transmission system to put into the ground to fill storage, if it's very high pressure and the pressure is higher than that in the reservoir, then you'll just open a valve and it will flow in naturally and balance out. But you may get to a point where you actually need compression to continue to fill the reservoir. And then the flip side, when you're ready to withdraw it or you need to withdraw the gas from the storage facility, again, what's the pressure of your reservoir relative to the pressure of the downstream pipeline? You have to have a higher pressure in the reservoir than you do in the downstream pipeline to get it to flow. And again, the more gas you pull out of storage, the lower the reservoir pressure is going to be. And at some point in time, you may actually have to use those compressors to suck more gas out of storage and push it into the downstream pipeline. Now, when you're developing a storage field, let's say you found an old depleted oil gas field, one of the issues is going to be the fact that you're going to have to put gas in it to build the pressure up to a certain level. Now, that gas won't be used initially. It's known as the cushion or base gas, and it's going to have to fill approximately 50% of the size of the reservoir. So let's say you have a reservoir that can handle 1 billion cubic feet a day. Well, you're going to have to put 500 million cubic feet a day in that reservoir before you can actually start to put additional gas in on the next level, which is what we call the working gas. That's going to be your usable and recoverable gas that you can operate with day in, day out. Now, the cushion gas, eventually you will pull that out once you determine that you no longer wish to use this as a storage facility. Another type, and these are big along the Gulf Coast. These are salt dome caverns. These are large impermeable holes, and literally they're created once a salt formation is found. They actually inject high pressure water into the formation and clean it out. You're going to have what amounts to highly saturated, super saturated salt water or brine that's going to be pulled out of there. Again, the idea being once you've got this hollow formation, same thing as with the natural gas reservoir, how are you going to inject it? Can you free flow it in from a pipeline or are you going to have to compress it from a pipeline into the reservoir? The flip side also being exactly the same as the natural gas reservoir. When you need it, can it free flow out into the downstream pipeline or will you have to eventually compress it? Now, because these are, in essence, these large spaces, actually you can put a lot of gas in and pull a lot of gas out frequently. It has what we call the high deliverability. You can pull a considerable amount out on a daily basis as you need it. But cyclability really is the characteristic of a reservoir that allows you to put gas in one day and literally take it out the next day. You can cycle that space, inject, withdraw, inject, withdraw, and so on. Aquifers, these are really the least desirable storage facility. What happens here is if you've got gas companies or perhaps an electric company that uses natural gas to generate electricity, they may want to find a storage facility close by, but we're talking about an aquifer. So this is a situation where they've found an underground aquifer. They're going to basically push natural gas in, which you're going to force some water out. Then when they need it, they're going to push water back in and get the gas out of it. The problem there is the overall characteristics of an aquifer are not really known. You're going to have some gas that may in fact migrate through the aquifer and you may not get back all the gas that you put in. Then as you can see here, when you initiate one of these aquifers, you're talking about putting in 90% of the gas that you want to eventually try to get back out. So you're only using about 10% of deliverability when you actually need it. Here's just the different types you can just see really quickly. You've got salt caverns. They're showing that they're using some old mines, the aquifers, depleted reservoirs, and then some hard rock caverns. The types of storage that we talk about, we have seasonal storage. Again, these are mostly the depleted oil gas reservoirs. When we talked about the New York Mercantile Exchange contract for natural gas, we talked about things like strips. We have winter and summer strips. Well, those are based on the storage activity in the industry itself. Traditionally, gas was bought in April through October because it was cheaper. Stored in underground storage facilities and then brought out during the winter months of November through March. So we talk about summer in the natural gas industry as being able through October and the winter as being November through March. In terms of the high deliverability class of storage, as we mentioned about that, these are mostly salt caverns. Or we've got a depleted oil gas reservoir and we've enhanced it somehow by putting in additional compression. Or in fact, making sure that we have gone in and bought it horizontally. The traditional operators or users of storage, pipeline companies, especially in the supply area, they might put additional gas in the ground for eventual use or sales and then definitely in the market area. If they can find old oil gas reservoirs or can create salt caverns in their market area, then obviously they've got emergency supplies for their customers if needed. And then for the local distribution companies or gas companies, they generally look for possible storage facilities as close to their market area as possible. Traditional uses. Again, really this idea that you want what we call peaking supply. At periods of high demand in the winter time, what happens is the system as a whole across the United States, you start to lose gas because a lot of these wells run into problems with freeze offs and some of the processing plants can also have issues with freeze offs where in essence the water in the natural gas creates ice blocks. And so when you have freeze offs and there's less gas getting into the system, the storage becomes the supplemental supply. And in the summertime, of course, traditionally you have lower demand and so you have lower prices. Well, that creates a couple of situations. Lower demand can lead to higher pressure in the pipelines. As all this gas is trying to get in and it isn't being consumed or taken out, pipeline operators can use storage to relieve some of that pressure. They'll divert some of the gas in the pipeline into the storage facilities. And then of course there's the opportunity to take advantage of lower pricing. If in fact summer prices are lower than winter prices, then those who have capacity can put gas in the ground and pull it out when the winter comes and gas is much higher pricing. And then we also use them for what's known as emergency deliverability. If you recall the winter of 2013-2014, it was extremely cold for a large period of time and as we experienced more and more freeze offs and as storage was drawn on, it had to be drawn on very heavily. Now, when we were talking about the fundamental factors that influence prices for natural gas, one of the things that we did talk about were hurricanes during the hurricane season. So if there's a supply disruption in the Gulf Coast, then the onshore entities would basically extract storage gas to supplement what is being shut in, so to speak, during the Gulf Coast issues with storms coming in. A lot of the current users are still pipelines. They provide what we call market responsive services because again, this whole idea that the supply and demand for natural gas is an ever changing situation. So pipelines are providing seasonal storage that we talked about, cyclable storage or what we also call parking loans. You can have temporary arrangements with pipeline companies whereby if you've got some extra supply and you don't have a market for it, rather than, let's say, turn off the wells, you can go ahead and put it in their storage facility for a short period of time and they'll charge you a fee for it. Now, conversely, at times where you may find yourself short of supply, you may actually be able to borrow some natural gas from the pipeline and then you will eventually give the physical gas back to them and they will charge you a fee for borrowing that gas. Gas companies, again, local distribution companies, they are traditional storage holders. They also have some short-term needs in terms of any types of peaking that may occur both in the summer or the winter time. Now the pricing, not all gas companies can just jump out and purchase storage capacity. The Public Utility Commission of the respective state is going to dictate if they can purchase storage capacity, how much capacity, and what they're going to pay for that and then if, in fact, those fees can be passed on to their ratepayers. And then last but not least, we have a large group of marketer trading companies who enter into storage agreements because before the natural gas industry was officially deregulated in 1985, the pipelines themselves would buy, transport, store, and sell the natural gas. Well, when those services were broken up or unbundled, third-party entities came in, these marketer-trader groups came in, and now what they would be doing is they're going to go out and buy from the producer, they're going to ship it on the pipeline, they're going to store it and provide various services to these end users. So they're going to do things with storage capacity such as peaking gas, what we call same-day gas. If they have gas in the ground and something happens either with a gas company or even a utility that burns natural gas at a power plant, since they have gas in the ground, they may be able to get them gas the same day as opposed to trying to find some source of gas that's out there, you don't just turn wells on and off every day. With storage, they can also provide a service that's known as gas on demand. Now, this is primarily used in relation to power plants that burn natural gas. They want the ability to increase or decrease generation with their gas-fired units. Well, the only way they can do that is to be able to instantaneously increase or decrease their gas supply at the power plants and on the overall physical natural gas delivery system. The only way that can be handled is with storage. Now, the other thing that this does for marketing companies, as we've talked about with the New York Mercantile Exchange, from time to time there are arbitrage opportunities. For instance, marketing companies can buy gas in the summer months and sell gas in the winter months. In other words, they can literally buy New York Mercantile Exchange contracts in the summer months, turn around and sell contracts in the winter months, thereby knocking in or hedging a spread margin. As we talked about, this would be a perfect example of a time spread where they've gone ahead and bought certain months and sold other months. Again, all the volatility in terms of natural gas pricing can be taken advantage of if you actually have some storage capacity.