ADI evaluated commercial options for a Gulf Coast pipeline asset by analyzing regional basis spreads and regulatory pricing structures. Feasible pricing bands were established for monthly reservation fees and variable commodity charges by benchmarking against competing regional systems. Through this framework, the team mapped risk trade-offs between fixed reservation revenue and opportunistic spot market access amid localized grid and pipeline capacity constraints.
The client
Midstream infrastructure developer
The situation
An infrastructure developer faced uncertainty regarding tariff structures and realization risks for a planned Texas Gulf Coast pipeline asset.
ADI’s contributions
Regulatory tariff benchmarking
Evaluated 275 intrastate and 140 Section 311 public filings from the Texas Railroad Commission to map baseline price floors and ceilings for regional transportation services.
Basis spread monetization modeling
Deployed a proprietary pricing database to analyze historical price spreads between hubs, identifying peak margin capture opportunities during infrastructure bottlenecks.
Volumetric risk isolation
Modeled the relationship between asset capacity utilization and effective unit costs, proving how low shipper flows drastically inflate real transportation expenses.
Operational flow risk analysis
Formulated a comprehensive penalty and imbalance framework that insulates system reliability against shipper non-compliance under tight seasonal operating conditions.
Key outcomes
- Enabled capital prioritization and commercial positioning by establishing defensible baseline ranges for firm and interruptible transportation tariffs, guiding the developer’s upcoming open season and contract structure negotiations.
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