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Virtual Simulation Specification and Design
Routes & Size14.35 – 15.20
Adam Cooper (MLCE) &
Mike Young (Centrica)
Stakeholder Involvement and Participation
• The Role of Stakeholders• Virtual Simulation to model a process• If not real, at least realistic• Essential to gain involvement to be credible• Inputs from Shippers / Traders and their
requirement for capacity and view on its valuation
• Representing the users of the asset to be invested in
Shipper/Trader Inputs• Reflecting actual use of asset
– Delivery of gas to a consumer market– Movement of gas between Trading Hubs– Hybrids of these, e.g.
• Gas acquired at Hub for consumer market in another member state• Gas delivered from outside EC for onward transmission to be sold at Hub
• Valuation of capacity based upon:-– Supply-demand gap– Expected price basis (inter-hub)– Expected gas re-sale margin– Availability of competing pipeline/route?
• Major inputs in the simulation design from Shipper/Traders– Routes– Size
Routes - principles
• Based upon key elements of German, Dutch, Belgian and French Hubs and Networks
• Between Trading Hubs
• Between Entry and Exit Points of the wider Trans-National networks
• Suggestions for routes for the Virtual Simulation
Virtual Simulation Case – Suggested Routes
• Route - Option 1– NCG (EGT) to PEG Nord (via Belgium)
– Conventional Route• NCG VTP E.ON
Gastransport• Eynatten Exit E.ON Gastransport• Eynatten P2P Fluxys• Blaregnies P2P Fluxys• Taisnieres Entry GRTgas• PEG Nord VTP GRTgas
Virtual Simulation Case – Suggested Routes
• Route - Option 1a– NCG (EGT) to PEG Nord
(Direct Germany to France)
– Conventional Route• NCG VTP E.ON
Gastransport• Medelheim Exit E.ON Gastransport• ObergailbachEntry GRTgas• PEG Nord VTP GRTgas
Virtual Simulation Case – Suggested Routes
• Route – Option 2– TTF to NCG (EGT)
– Conventional Route• TTF VTP GTS• Oude Exit GTS• Oude Entry E.ON Gastransport • NCG VTP E.ON
Gastransport
Virtual Simulation Case – Suggested Routes
• Route Option 3– TTF to PEG Nord
– Conventional Route• TTF VTP GTS• Zelzate Exit GTS• Zelzate P2P Fluxys• Blaregnies P2P Fluxys• Taisnieres Entry GRTgaz• PEG Nord VTP GRTgaz
Incremental Size - Principles
• For the Virtual Simulation we should assume a dedicated pipeline
• Therefore, size needs to be substantive in order to be realistic for a dedicated pipe
• In “real world” smaller increments may lead to enhancement of existing pipeline (e.g. compression)
Virtual Simulation – Incremental Size, proposals
• Option 1– 100 GWh/d – 3.3 bcm/a (N)– 9 mcm/d (N)
• Option 2– 500 GWh/d– 16.4 bcm/a (N)– 45 mcm/d (N)
Virtual Simulation Specification and Design
Design of Market Test17.00 – 17.30
Adam Cooper (MLCE) &
Mike Young (Centrica)
Existing processes (1)
• Open Season– Indicative (non-binding) bids by Users– Initial “price schedule” based upon indications– Binding commitment by Users– Regulatory Approval – Allocation of incremental capacity across
binding commitments
Existing processes (2)
• Annual Allocation– Establish Capacity Release Methodology which
incorporates Regulatory Approval– Price schedule published, based upon x% to y%
increment above existing capacity (baseline) at Px to Py
– Users “bid” for quantity of capacity at each price step• Binding, but can be amended up to “closure”
– Users bids aggregated and compared with hurdle set to meet investment criteria, i.e. %age of investment project cost (? with NPV applied)
Existing processes - issues
• Pros & Cons of either approach– Open Season
• Ad-hoc process• Lack of transparency, Black Box approach to Allocation• Needs co-ordination between operators
– Annual Allocation• Regular diarised process• Methodology established and available at the outset• Equity of treatment of bidders
• Are there alternatives?