NATURAL GAS ADAPTIVESCHEDULING

Peak Energy Solutions, Inc.Phone: (719) 265-6621Email: stevehoyle@peakenergysolutions.comSupport Email: support@PeakEnergySolutions.com

forAPA GroupPerth, WA

Peak Energy Solutions, Inc.

Peak Energy Solutions, Inc.2

Overview

Introduction to Peak Energy Solutions, Inc.

What is Natural Gas Adaptive Scheduling

(NGAS)?

NGAS Implementation for Gas Clients

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Highlights

Provides fast-running, customized, gas scheduling software

Years of experience in natural gas scheduling and process optimization

Familiar with NAESB and a wide variety of pipeline business rules

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Current NGAS Customers

El Paso (and Mojave) since 1994

Northwest Pipelines since 1996

Kern River Gas Transmission since 2000

Texas Gas (Boardwalk Pipelines) since 2004

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Principal AssociatesSteve Hoyle, Ph.D. Stanford University,Mathematical Programming First use of AMPL/CPLEX in natural gas scheduling in 1994

Alan Magner, Bachelor of Business Studies in Economics & Accounting, University of Limerick 20+ years in Lean Six Sigma process improvement

Deb Parker, M.S. Stanford University,Operations Research Experience in natural gas scheduling since 1997

Steve Dziuban, Ph.D. Rensselaer Polytechnic Institute,

Operations Research and Statistics Experience in natural gas scheduling since 1997

Linda Tully, M.S. University of Colorado,Computer Science Experience in natural gas scheduling since 2004

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Physical View

Capacity limits at receipt, throughput, and delivery locations are enforced.

Ownership View

• Gas ownership transitions from upstream supplier, through pipeline (including pools), and to the downstream market.

• Total gas flow is determined by supply/ demand in accordance with tariffs, laws, regulations, and agreements.

Natural Gas Distribution Environments

Rec

Rec

Throughput

Del

Del

Markets

Pool

Pool

Suppliers

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What is NGAS?Natural Gas Adaptive Scheduling

A scheduling engine that interfaces with your system to provide optimal scheduling solutions

Uses state-of-the-art optimization methods

Implemented with powerful AMPL/CPLEX linear programming software -- essential for large, complicated pipelines

Runs on PC or UNIX platforms

Most effective when used to perform all scheduling adjustments (cuts)

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Advantages of Using NGAS

Outperforms industry running times: typical run times of 2 to 5 minutesCost effective -- full-time AMPL/CPLEX developers not neededHigher pipeline throughput via unique “reinstatement” optimization stepDisplacement handled automaticallyMost business rules are data-driven (such as Priority of Service for capacity cuts; and number and length of cycles)Gas clients own customized code

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Traditional Scheduling

“Double cuts” decrease throughput– Always occur when sequential cuts are made– Result from physical and ownership cuts

Ineffective use of displacement gas decreases throughput

NGAS Increases Throughput

Automatically uses displacement gas

Detects slack in schedule created by earlier cuts

Uses this slack to reinstate gas on double-cut noms/contracts without violating any constraints

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SEQUENTIAL APPROACH A B C D

1. Pool Balance: Cut A to 110 110 90 120 80

2. Operator: D is above limit by 10 so cut 100 90 120 70it to 70 then also cut A by 10 more

3. Capacity: B is over by 20 so cut to 70 and, 100 70 100 70since D is firm, cut C by 20

ADDITIONAL NGAS STEP

4. By considering all constraints simultaneously, 120 70 120 70NGAS recognizes ‘slack’ created by double

cuts and reinstates 20 to noms A and C

NGAS Avoids “Double Cuts”

nom 90B (rank 1)

nom 150 nom 120

nom 80

Pool

A (rank 2) C (IT)

D (firm)

RULES

- Pool Balance: Flow in equals flow out- Operator: Physical or contractual- Capacity: Physical limitation

170Throughput

190Throughput

NGAS Results

TraditionalResults

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APA WA and NGAS working together

How would improved transmission

throughput benefit APA in WA?

As client volumes and

infrastructure are changing, is the

APA transmission optimized?

Does APA in WA have optimized

shipping in its network?

Can gas shipments be scheduled

between disconnected pipelines?

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APA Group and NGAS working together

Fast data I/O

Are the requirements for APA on the

east coast different from WA?

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Gas Client System and NGAS work together

Fast data I/O

Friendly customer

interface

Well suited to

accounting

Database/GUI “Piece” NGAS “Piece”

Fast data I/O

Friendly customer

interface

Well suited to

accounting

Fast running algorithms

Optimal, accurate scheduling

Maximize throughput

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Implementation Highlights

Several initial pool balancing and rebalancing methods available

Modularity facilitates maintenance, such as changing the cut order

Capacity techniques make verification and explanation of cuts much easier

Previously scheduled amounts protected at contract level or at nomination level, or can be cut

Implements complex, customized segmentation rules

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NGAS and Gas ClientSystem Integration

Gas Client System• Gathers and stores information (contract data, nominations,

etc.)• Provides input data to NGAS using flat files or ODBC

NGAS sequentially determines and labels cuts with accurate reason codes• Cuts are passed to database via NGAS flat files or

ODBC• Reinstatement “cuts” are labeled as such• NGAS provides outputs (by nomination, contract, point, etc.)

Gas Client System uploads output files• Updates database tables• Prepares outputs and reports for display to end-users

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Notional Implementation Sequence

for Gas Client

Develop software requirements

Describe database interface

Build NGAS model

Run test sets for verification of results

Train Gas Client personnel as needed

24/7 support agreement available

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Requirements Considerations

Contract or market carriage (combination?)

Priority of Service (firm forward haulage vs. Interruptible haulage; pro-rata rules)

System Use Gas by contract or nomination

Pool structure and balancing rules

Tiebreaking Rules (Ranks, Dates, etc.)

Force Majeure and Assignment rules

Park Services (physical, contractual, seasonal)

Physical pipeline model (grid vs. soda straw)

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Requirements Considerations

Capacity cuts (Physical limits at receipt, delivery, throughput, net, bi-directional; hourly vs. daily)

Non-Capacity Cuts (Operator balancing, contract limits, Park/Lend)

Imbalances

Data Input/Output

Reports (cuts, contract amounts, point flows)

Run times needed

Anticipated development timeline (SRS, data, test, implement, support)