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Natural Gas Market Information

Natural Gas Market Information. Scope of Presentation. Natural gas information market monitoring support for market transactions Information models architecture. Generalized Schematic Sales of Natural Gas in U.S. Consumers. Gas Processing Plant. Residential Commercial Industrial

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Natural Gas Market Information

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  1. Natural Gas Market Information

  2. Scope of Presentation • Natural gas information • market monitoring • support for market transactions • Information models • architecture

  3. Generalized SchematicSales of Natural Gas in U.S. Consumers Gas Processing Plant Residential Commercial Industrial Elect. Util. Local Distrib. Company Wellhead Production Pipeline Underground Storage Imports Third Party (Marketer, Broker)

  4. Participants Miles of Pipe Regulatory Regime in 2000 Producers 8,000 Independents Phased price deregulation -- 24 Majors Begun in 1979, completed in 1989 Pipelines 160 285,000 Federal Energy Regulatory Commission (FERC) Natural Gas Marketers 260 -- Unregulated Local Gas Utilities 1,200 State Utility Commissions 833,000 Residential 53 million Unregulated End Users -- Commercial 4.5 million Industrial 40 thousand Interstate - FERC -- Electric Utilities 500 Intrastate - State Commissions The U. S. Natural Gas Industry At A Glance

  5. Sources of Information • Delivery • LDC / pipeline tariffs • Pipeline internet sites • Third party internet sites • Commodity • Spot Market Center Systems • Futures Markets (NYMEX / KCBOT) • Third party (after-the-fact) published prices • EIA (used to monitor historical activity)

  6. Diverse Users with ... Trade Press and Media Government Information Aggregators OPERATORS Producers Pipeline Storage LDCs FINANCIAL Risk Managers Investors Marketers Brokers Traders Market Players CONSUMERS

  7. ...Diverse Information Needs Government Trade Press and Media Information Aggregators MARKETERS Spot prices Futures prices Storage changes Supply Demand Weather OPERATORS FINANCIAL Reserves Flow Rates Nominations Receipts/Deliveries Weather Prices Spot prices Futures prices Supply/demand forecasts Market analysis Market Players CONSUMERS Price Terms and Quality of Service Alternative Fuel Prices Long-term Availability

  8. Regulators Role Is Changing Company Centric Industry Centric Federal regulation of pipelines (by FERC) focuses on the structure and operation of energy markets. • Effect of competition • Impact of policies • Monitoring and oversight of markets

  9. Overarching Goal of Federal Energy Regulators in the U.S. • Maximize consumer and economic benefits • Minimize the need for future regulatory intervention

  10. Market Monitoring Tracking performance indicators of a well-functioning market • Efficiency • Transparency • Transactional liquidity • Ease of market entry and exit • Competition

  11. Information Needed to Support Rate Making Activities

  12. Access to Information - Important in a Competitive Market Relevant information is needed by: • Consumers - to make informed decisions on energy purchases. • Regulators - to monitor transactions and to prevent exercise of market power.

  13. What is “Relevant” Information? Information on … • Available services - e.g. capacity (capacity, available capacity, system outages) • Market structure including affiliate relationships • Transactional Information • Imbalance and overrun information

  14. Transparent wholesale natural gas prices Weekly storage ‘estimates’ Futures market information Electronic access to capacity information Electronic gas trading systems The Information Revolution... How far We’ve come Information that was not available prior to the industry restructuring

  15. Transparent retail natural gas and electricity prices • Real time information systems • Information on exchanges of gas (maybe even daily storage estimates) • Gas/electric convergence (and developing Btu markets) may lead to additional information needs In the Future Information Needs May Include

  16. Information Systems to Support Market Transactions • Electronic bulletin boards • Electronic trading systems • Value added networks (VANs)

  17. Non-EIA Information Systems For Consumers

  18. Natural Gas Page on EIA Web Site (Upper Screen)

  19. The Case for Standardized Business Practices Gas Industry Standards Board • Pro-active approach - reps from many segments of the industry participate • Facilitates business transactions with multiple pipelines and suppliers.

  20. Information Architecture FERC Model

  21. Information Architecture(FERC Model) Source: FERC

  22. Information Technology Architecture (As Implemented by the FERC) Built on the concept of 3 layered infrastructures connected by the security infrastructure: • Information infrastructure • Communication infrastructure • Processing infrastructure

  23. Information Infrastructure Well-defined data and data relationships are essential to a secure and interoperable information infrastructure • The information itself is what is most important • Characterizes the type of information (who needs it and how it is generated, accessed and maintained. • Defines data, models, data relationships, facilitates storage and retrieval, and describes the constraints/limitations on the use of the data • This knowledge is then used to develop a tech. strategy for efficiently managing the data • Value through use of common data format and exchange standards

  24. Communications Infrastructure • Objectives: • connectivity - ability to interface with current and anticipated processing equipment • interoperability - permit hardware from competing vendors to communicate. Open system design that allows independence and flexibility • scalability - configured to support required range of users and traffic requirements

  25. Communications Infrastructure • Consists of the communication equipment, software and networks that link computers and peripherals within the organization. Provides: • protocols for information movement • mechanisms for detecting network faults • mechanisms for linking with other networks

  26. Processing Infrastructure • Provides the computer systems and software necessary for: • computing, comparing, selecting, evaluating • moving, displaying information • managing user interfaces • managing system processes and controlling system usage

  27. Security Infrastructure • Consists of the requirements, policies and practices to secure information sharing: • safeguard resources and supervise resource sharing • ensure resource availability to authorized users • detects and reports intrusion attempts by unauthorized users

  28. Design Considerations • Flexible - should accommodate future needs • A standard architecture reduces the complexity of the computing environments promoting consistency among applications and data and reduce redundant products • Central to the definition of architecture is the identification and use of standards. • Develop the user's ability to transparently interact and exchange information with other systems and users. • Communication services and associated standards are a fundamental part of establishing interoperability.

  29. Goals Re: Information: FERC Model • Flexible • Practical • Efficient (more efficient operations) • Reduce costs/customer burden • Provide efficient, cost-effective access to the information that is needed by regulated entities and the general public -- when they need it -- and in a format that is useful to them. • IN ADDITION - security of the data, data network and interchange may be a major concern.

  30. Primary Technical Considerations • Primary focus include the concepts of flexibility, enhancement, security, cost/benefit and standards. • Provide vendor-neutral, cross-platform method of transporting and validating critical data

  31. E-filing Information • Becoming more prevalent in the gas industry. • Should ensure that any gains or improvements made (e.g. e-filing) are not hindered by non-electronic processing i.e., all manual processes immediately following the electronic filing process.

  32. Transition Strategy - Options: 1. System leap - where organizations standardize on a system for several years then "leap" forward to new systems every 3-5 years (total system replacement every x years) 2. Incremental change paradigm - when organizations continuously adopt incremental upgrades • Advantages include: minimal training costs, min. problems with staffing and communication, budget requirements are spread-out over several years 3. Rolling replacement - e.x. change occurs at a constant rate - e.g. a third of the change happens each year.

  33. Natural Gas Information Program at the Energy Information Administration

  34. Key Data Area of Interest • Supply activities: production, storage, imports • Supply infrastructure: • transmission and storage capacity • drilling, producing wells • Consumption by sector • Prices: • cash and futures markets • wellhead to downstream

  35. Why is Good Information Important? • Information is needed for policy making and for assessing the gas industry’s performance. • Public policy now relies on competition to ensure adequate supplies, low costs, and reasonable prices to consumers. • Private investors need accurate and reliable information for investment decisions.

  36. Measurement of Volumetric Information about the Domestic Natural Gas Industry • Production volume • Underground storage • Consumption by residential, commercial or industrial customers • Consumption by regulated electric utilities • Consumption by other electric generators • Transportation of natural gas

  37. Monthly Measurement of Natural Gas Data

  38. Form EIA-895 Form EIA-857 Gas Processing Plant Natural Gas Produced at Wellhead Residential Commercial Industrial NUGS Utility Local Distribution Company Pipeline Other Pipeline(s) Underground Storage Form EIA-191 Imports and Exports Form EIA-759 Monthly Data Measurement Points and Systems: Physical Flows of Natural Gas from Wellhead to Burnertip

  39. Important Issues for Data Quality (Accuracy and Adequacy) • How do we assure that we are asking the right questions of the right parties? • Assessing the changing information needs • Issues of frame development and frame maintenance • If a sample, its design and assuring representativeness and precision • Issues of Forms design

  40. Major Steps and Processes in a Survey • Initial Steps • Determine requirements for information • Design and test instrument • Obtain approval for instrument • Develop and implement processing system • Field instrument

  41. Major Steps and Processes in a Survey - Cont. • Fielding the instrument (some of the details) • Determine the potential respondents • Building and maintaining the frame • Select the respondents • Total enumeration or sample? • If latter, design and select the sample • Distribute the instruments

  42. Major Steps and Processes In a Survey - Cont. • For each survey cycle • Receive, track, and enter data from respondents • Edit responses • Follow up with respondents for edit failures • Deal with non-response • Prepare and evaluate aggregate estimates • Prepare dataset feeds for distribution media

  43. Dealing with Data Problems • Nonresponse • Imputation • Nondisclosure of confidential information • Noncoverage due to design considerations • “Truth in statistics” statements • Recognize limitations and develop alternative procedures to fill the gaps in data requirements

  44. Natural Gas Information Products Accessibility • Products are distributed through the EIA web site. • The EIA web site provides quick release of products. • Some reports are also printed, although EIA is phasing out most printing. • Databases are available through the EIA web site and on the EIA CD

  45. Why is EIA doing Strategic Information Planning? No coverage of key areas - marketers Information needs have increased Declining coverage in some existing data series (prices) Reassess Data/ Information Program EIA’s goal: - minimize respondent burden - optimize processes/resources - maximize customer satisfaction

  46. NEXT GENERATION * NATURAL GAS (NG)2 A project to design and implement a new, comprehensive information program for natural gas to meet customer requirements in the post-2000 time frame.

  47. Natural Gas Data Systems Development With changes in the regulatory and financial environment, EIA’s natural gas systems are increasingly unable to successfully measure the industry • Separation of equity from custody flows • Rise of Actors outside the scope of current systems • Development of new phenomena such as market hubs

  48. Next Generation * Natural Gas Project Overview Data Requirements Industry Conceptual Design Information Collection Redesign Cognitive and Pilot Testing Focus Group Report Implementation

  49. Focus Groups • Purpose: Obtain opinions, information and insights on what data EIA should collect in the future • Format: • structured • administered by an independent firm • discussions are confidential • Results: will be used to guide EIA in designing the natural gas data program to meet the information needs of the industry

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