Common use of System Optimization Portfolios Clause in Contracts

System Optimization Portfolios. The system optimization portfolios include a range of financial and physical transactions that are used to fine tune system operations and performance. Included in this category can be financial transaction types such as futures, swaps and options or physical activity such as volumes transported by pipeline from the U.S. Gulf Coast. These transactions can be done on either a stand-alone basis or in combinations such as spreads that result in a net balanced volume position. An example would be a Gulf Coast swap transaction put in place with the opportunity to lower the cost on an expected future product delivery requirement. Currently, the System Optimization Portfolio is only relevant for oil transactions, though if the natural gas system (e.g. inventory) grows substantially in the future, there may be a justification to isolate the system supply and optimization portfolio in natural gas also.