# Presentation: 301155

## Natural Gas Market Information

- Barbara Mariner-Volpe
- February 2001
- Bangladesh Ministry of Energy and Mineral Resources
- barbara.marinervolpe@eia.doe.gov

- <date/time>

- <footer>

## Scope of Presentation

- Natural gas information
- market monitoring
- support for market transactions
- Information models
- architecture

## Generalized SchematicSales of Natural Gas in U.S.

- Gas
- Processing
- Plant

- Pipeline

- Underground
- Storage

- Local
- Distrib.
- Company

- Residential
- Commercial
- Industrial
- Elect. Util.

- Imports

- Generalized Schematic**Sales **of Natural Gas in U.S.

***Third Party***
*** ******(Marketer, Broker***)

_*Consumers*_

## Slide 4

## The U. S. Natural Gas Industry 

**The U. S. Natural Gas Industry **
**At A Glance**

## 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)

## Diverse Users with ...

**Marketers**
**Brokers**
**Traders**

**   **_**OPERATORS**_
**Producers**
**Pipeline**
**Storage**
**LDCs**

**Trade Press and Media**

**    **_**FINANCIAL**_
**Risk Managers**
**Investors**

**CONSUMERS**

**Information **
**Aggregators**

***Market  Players***

**Government**

## ...Diverse Information Needs

_**CONSUMERS**_
**Price**
**Terms and Quality of Service**
**Alternative Fuel Prices**
**Long-term Availability**

**Spot prices**
**Futures prices**
**Supply/demand**
**forecasts**
**Market analysis**

_**MARKETERS**_
**Spot prices**
**Futures prices**
**Storage changes**
**Supply **
**Demand**
**Weather**

**Reserves**
**Flow Rates**
**Nominations**
**Receipts/Deliveries**
**Weather**
**Prices**

**Information **
**Aggregators**

**Market  Players**

**Government**

**Trade Press and Media**

_**OPERATORS**_

_**FINANCIAL**_

## 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

## Overarching Goal of Federal Energy  Regulators in the U.S.

**Maximize** consumer and economic benefits
**Minimize** the need for future regulatory intervention

## Market Monitoring

**Tracking performance indicators of a well-functioning market**
- Efficiency
- Transparency
- Transactional liquidity
- Ease of market entry and exit
- Competition

## Information Needed to Support Rate Making Activities

## 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.

## 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

## The Information Revolution...

**How far We’ve come**

- Information that was not available prior
-  to the industry restructuring

## In the Future Information Needs May Include

## Information Systems to Support Market Transactions

- Electronic bulletin boards
- Electronic trading systems
- Value added networks (VANs)

## Non-EIA Information Systems For Consumers

## Natural Gas Page on EIA Web Site

- (Upper Screen)

## 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.

## Information Architecture

- FERC Model

## Information Architecture(FERC Model)

- Source: FERC

## 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

## 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

## 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

## 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

## 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

## 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

## 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.

## 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.

##  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

## 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.

## 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.

## Natural Gas Information Program at the Energy Information Administration

## 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**

## 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.**

## 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**

## Monthly Measurement of Natural Gas Data

## Monthly Data Measurement Points and Systems: Physical Flows of Natural Gas from Wellhead to Burnertip

## 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**

## 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**

## 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**

## 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**

## 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**

## 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**

## Why is EIA doing Strategic Information Planning?

**have increased**

**Why is EIA doing Strategic ****Information Planning?**

** ****No coverage of key **
**areas - marketers**

** ****Declining coverage**
**in some existing data**
**series (prices****)**

**Reassess Data/**
**Information Program**

**                 ****EIA’s goal:                                                 **
**         ****- minimize respondent burden        **
**        ****- optimize processes/resources     **
**         ****- maximize customer satisfaction****    **

## 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.

## 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*

## Next Generation * Natural Gas

- Project Overview

**Data Requirements**

**Information Collection**
**Redesign**

**Cognitive and**
**Pilot Testing**

**Implementation**

**Industry**
**Conceptual**
**Design**

**Focus Group**
**Report**

## 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

- <date/time>

**Focus Groups**