Providing alternative means to contract for storage assets.
Historically contracted on a long-term basis, access to crude oil storage has previously been available primarily to large, well-capitalized customers who can physically accept and schedule large deliveries. The Matrix model at LOOP is designed to attract new participants who can access storage via short-term to intermediate-term contracts.
Because it allows storage operators to leverage the optionality inherent in storage contracts, a standardized storage futures contract provides the storage operator an opportunity to capture the value of a steeper contango. When coupled with other aspects of the program, it is an excellent adjunct to a storage operator’s risk profile.
By developing a standardized storage futures product, there is a reduction of counterparty risk through the exchange clearing house guarantee. This not only minimizes credit exposure found in term contracts, it provides reduction in transactional costs.
Optimizing the value of storage assets and providing flexibility, the Matrix model is a desirable way for storage operators to attract customers and maximize storage utilization. Easily scalable, the Matrix model can also be expanded geographically, bringing value to storage operators by creating a liquid hub at their location.