Thursday, June 5, 2008

Centaurus, Carlyle Carve Gas Caverns as Traders Bet Prices Rise

From Bloomberg:

John Arnold turned $8 million into $1.5 billion in the past six years by betting on natural-gas prices. Now the former Enron Corp. trader is seeking his next fortune under a Colorado cow pasture.

Arnold's Centaurus Advisors hedge fund and the Carlyle Group buyout firm are digging natural-gas storage caverns 2,500 feet (760 meters) under scrub grass on Rocky Mountain ranches and cypress trees in Louisiana swamps.

Storage demand is surging as new pipelines and import terminals expand supplies of natural gas, this year's second best-performing commodity after coal. Speculators buy and store the fuel when costs are low and sell as prices rise during cold snaps or heat waves in major U.S. cities.

``If gas is $12 but you think it's going to $15 next winter, you can put it in storage now,'' says Jim Tobin, a U.S. Energy Department analyst, quoting prices for a million British thermal units. ``Maybe it cost you a buck in storage fees, so that's a $2 profit, assuming you called it right.''>>>MORE

From our Aug. '07 post, Investing in Natural Gas:

Natural gas futures are down.
The September contract is trading at $5.82 down 21 cents.
The January '08 was $8.20. If you know anyone with (large) gas storage capacity (besides Uncle Dave on a fishing trip) drop me a line....