The following exercise envisions the use of a hypothetical CAS based tool, called Transform/Intrastate, in the tactical configuration of intrastate natural gas pipeline schedules given a set of receipt and delivery objectives and the ability to buffer the pipeline operation by buying and selling natural gas for system management purposes.

TARGET CUSOMER SCENARIO EXERCISE

“Transform/Intrastate”

User: Natural Gas Transmission System Scheduler/Commodity Trader
Technical Buyer: IT Department, Pipeline Systems Software Manager/Commodity Systems Software Manager
Economic Buyer: VP, Natural GasTransmission/VP, Commodity Marketing

Before:

Situation: Intrastate Natural Gas Pipelines operate within the constraints of their state regulatory body in the business of natural gas transmission. While the requirements of state regulators are many and diverse, they are generally regarded as less constraining than those imposed on interstate pipelines by the federal regulators. In particular, many states allow pipeline operators to continue to participate in the ownership of the commodity being shipped, as well as the business of shipping, offering a variety of “bundled” services to their customers (combinations of transmission services and purchase/sales options on the gas being shipped). There are many alternatives to the actual scheduling of the transmission, given the networked nature of most transmission lines. There may be natural gas storage facilities available along the transmission route where previously purchased gas may be drawn out to satisfy transmission contract demands, thereby making previously dedicated transmission capacity available for “resale' at a higher price. There is the option of buying and selling natural gas at a variety of points on the spot market for the same purpose. The best economic result for a pipeline operator is a continuous function of all of the possible combinations of these factors.

Desired Outcome: While pipeline operators do everything within their power to optimize these factors, a decision support system that would take all of these factors into consideration and improve the quality and timeliness of arriving at the best operational strategy in light of the economics of the operational decisions, as well as the practicality and efficiency of the operation itself, would be highly desirable.

Interfering Factors: Each of the factors in this economic system (the cost of operation and the scheduling of the transmission network, the operation of storage facilities, the average purchase price of gas in the storage facility, the cost of injection and retrieval of gas in the storage facility, the cost of gas on the spot market, and the contract specific transmission delivery and redelivery points, prices, timings, rights, options, qualities and quantities) are the subject of several business and information systems, ranging from the SCADA system that controls the operation of the pipeline to the back office system that allocates the physical volumes to the contracts. Because there is duplication and redundancy of information among these systems, as well as timing differences in its availability, the collection of a common set of data about the status of all components is extremely difficult. Once collected, the number and range of alternatives that could be employed is so large that current decision support techniques have difficulty dealing with them in the timeframes required by a real time decision support system. Once arrived at, the results of the deliberation must be executed through the plans and actions of a number of different business units in the field, creating timing, control and execution issues.

Economic Consequences: Because the transmission system is a regulated business, the rates available for transportation capacity on the pipeline are predetermined by service type tariff. Significant additional margin may be achieved by lowering the operational cost of the system through most efficient utilization of the assets. Shifting transmission capacity from long term, lower priced tariff classes to short term, higher priced tariff classes will increase margin, as well. In the merchant component, seasonal and weather related variances in the market may be used to acquire storage gas during low pricing periods for delivery in peak season.

After:

New Approach: Transform/Intrastate is an integrated decision support system that accesses and integrates all of the data necessary to make real time system scheduling decisions and utilizes state of the art optimization techniques derived from the study of natural evolutionary systems to explore the economic consequences of all of the operational alternatives.

Enabling Factors: Integrated data access is the enabling technology of Transform/Intrastate. The ability to see all contributing factors, to understand and catalog the nature and relationships of all factors is a key component of the system. Multi-objective optimization is the enabling science of Transform/Intrastate. Using new science which has come out of the study of natural systems, Transform/Intrastate is able to “search the landscape” of solutions to the problem in new and dramatically more effective ways than in previous generations of optimization software.

Economic Rewards: The first benefit of Transform/Intrastate is its ability to consider all of the operational configuration and commodity options and their economic consequences quickly enough for the recommendation to be acted upon within the necessary timeframes. This initial advantage is compounded during the scheduled transmission period by the systems ability to quickly assimilate changes in the schedule, react to the consequences of the changes, and issue new directives to adjust for the changes. It is a particular property of the new science to be most effective in a networked landscape of solutions where there are many and frequent interruptions to the scheduled events, just such an environment as a natural gas transmission system. The system solves for production efficiency as well as economic result, so the net solution at the end of the scheduled period is superior in both categories.