Mike, good discussion of our ?.  Even though we may never use the option,
	we do need to know if it is avail. &/or @ what cost, if any.  Please keep us posted
	w/ to what you uncover.  Thanks again.			l.  w.  s.

 -----Original Message-----
From: 	Bodnar, Michael  
Sent:	Friday, August 10, 2001 2:34 PM
To:	Medeles, Gerry
Cc:	Threet, Kay; Cabrera, Reyna; Blair, Lynn; Neville, Sue; Swett, Larry
Subject:	Allocation Review

Gerry, 
I had some discussions yesterday with Sue Neville and Larry Swett regarding storage allocations. They have a concern that our current procedure may not provide the minimum level of scheduled activity needed to support the physical storage requirements at certain times during the year.  In the month of July, Larry needs to maintain gas flow into Redfield and Lyons. A minimum quantity of 200,000 MMBtu (150,000 @ Redfield and 50,000 @ Lyons) per day is needed to avoid operational problems in the fields. Normally, the daily maximum withdrawal capacity at Cunningham (200,000) is more than enough to handle the contingency. However, there have been times where the net storage activity is less than minimum flow needed to meet minimum injection levels at Redfield and Lyons. 

For example, the receipt storage capacity is currently set at 600,000 and delivery capacity at 200,000. This means allocations are only triggered when the net storage activity is greater than a receipt (injection) of 600,000 or delivery (withdrawal) of 200,000. any net storage activity falling between that range continues uninterrupted  It follows then that if the net storage activity is zero (300,000 inj / 300,000 wd) no allocation is needed and if all things were equal, all NNG storage would be shut-in because all the gas destined for storage would be diverted to meet the withdrawal needs of others.

What Sue and Larry suggest is that floor (minimum injections in Summer and minimum withdrawals in the Winter) be factored into the allocation process to provide the minimum activity needed. For example, if we choose to set a floor (minimum) of 100,000 net injections and net storage activity is zero (300,000 inj / 300,000 wd), then storage allocation would be triggered because net storage injections were less than 100,000 MMBtu for that day. This floor would require that 100,000 of the withdrawals be allocated off to achieve a net storage injection floor of 100,000 MMBtu. 

Do you think that this floor concept is do-able? If so, how much time would program changes take to complete?
Lets get together next week to discuss further.