PORTFOLIO OPTIMISATION
Figure 3: Sample Natural Gas Portfolio of Assets in the Texas & Louisiana Region
ToNortheast
Gas production assets in Northeast Texas
Storage
There will be multiple ways – often in
Residential and C&I customers in the
D
Southwest region D D re
D D D
the hundreds or thousands – to meet all the constraints, with each way producing a different level of profit. The optimisation process involves evaluating all the possibilities and identifying the one that will result in maximum value. For example, to satisfy the constraint of utilizing all gas production from the Gulf Coast, there are number of options, including:
Sell gas from the Gulf of Mexico offshore production assets at Henry Hub
Storage Henry Hub Storage Other Southeast TXhubs
Gulf of Mexico offshore production assets
Source: Sapient Global Markets
Louisiana area, demand from residential customers in Texas and Louisiana, demand from C&I customers in northeast US and multiple capacity contracts with multiple pipelines in the region. The descriptions of the assets are captured in Table 1. Optimisation should account for a set of
constraints while maximizing profit. For example:
• All gas production must be utilized. • All demand commitments must be met
• Each location in the portfolio must be balanced daily.
• The proposed transactions should not breach the risk thresholds.
Hubs Storage Contracts
Gas Production Assets
Transport Contracts Demand Other Contracts 48 March 2013
NautilusHub
– The market price of gas at Henry Hub and the transportation cost are two of the factors that must be accounted for in the evaluation of this option.
Store the gas at Henry Hub
– The cost of injecting into storage, the cost incurred in
carrying inventory and the
potential profits that can be made in future months by withdrawing from storage and selling the gas at future market prices are
some of the factors to consider.
Use the gas to meet demand for residential and C&I customers in TX and LA
– The cost to transport gas from production facilities to demand centres needs to be considered. This option must be evaluated against other possible ways of meeting customer demand, such as buying gas from the market hubs or withdrawing gas from storage or using the term supply contracts or cutting deliveries to interruptible customers.
Export gas to the northeast US
– The market price of gas in the northeast and the possibility of importing gas from Canada are factors that will influence the selection of this option.
re
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