Canadian Operational Research Society

Calgary Section

http://www.corscalgary.org/

PROFESSIONAL DEVELOPMENT SEMINAR

When: Noon to 1:30 PM, Thursday, March 20, 2008

Room 217

TransCanada Tower

450 - 1 Street SW

(See attached map)

SPEAKER

Neil Robinson

TransCanada Pipelines Limited

TOPIC

A Capability-based Measure of Economic Working Gas Capacity
Abstract:

This talk is an extension and refinement of results in a talk presented at the October 2006 Calgary CORS seminar and was shown at the IAEE conference in September 2007. In the business of natural gas storage, the dividing line between base and working gas shares of total inventory seems indistinct. Available definitions vary but tend to focus on bulk space, perhaps modified with a rule of thumb about reserve capacity (See, for example, the EIA report of September 2006 that discusses three concepts). The present work starts with the flow-rate capabilities of a facility, along with sub-seasonal time spans available to complete a cycle of the storage gas, and then derives a model which defines maximum working gas for a facility in terms of its dynamical rather than its static limits.

We begin by defining “capability” as the flow rates available for injecting and withdrawing some volume of gas over a span of time, given some initial inventory state. Because of the physical nature of gas storage, it is usual to describe this in terms of flow rates as functions of inventory levels. Using approximations of the physical curves, we construct a linear dynamical model of an arbitrary gas storage facility. The resulting system is simple but captures the essential details and is easily generalized to realistic facilities. We then solve the model and find the steady-state maximum working gas -- the largest volume which can be cycled indefinitely over identical spans of time.

We then suggest that a working gas capacity measure based on time-limited flow capability is more economically meaningful than static measures of bulk size because the approach focuses on properties of gas storage services relevant to the markets, namely volume rates and timing. As a first step toward a general solution method, by using an example of fixed cost per period, we illustrate an extension to a dynamic definition of working gas capacity that incorporates marginal costs and revenues. This extension results in an economic definition which relates increasing marginal cost of using the next unit of available space and capability to the revenue the incremental space can be expected to earn and yields the profit maximizing working gas capacity for a facility.

About the Speaker:

Neil holds a Master of Economics from the University of Calgary (1991) and BBA from the University of Texas, at Austin (1982) and, since 1980, has worked in various land, risk and operations analytic roles in the Canadian energy industry in Calgary.

He currently works for TransCanada Gas Storage Partnership -- a sub of TransCanada Pipelines Limited -- as a Quantitative Specialist in the Gas Storage Operations group. Gas storage operations, valuation and related business issues have been a major focus for the past six years and a full-time focus for the past three. The mathematics of the presentation was initially conceived and developed, starting in the summer of 2005, as a means of quantifying design of storage-service products.