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[Oil & Gas White Paper] Best Practices Support Success in the Open Natural Gas Market

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Information management tools support responsiveness in today’s complex markets.

The changes throughout the energy supply market that have resulted from business globalization require natural gas transport operators to practice flexibility. Yet they need to keep safety and security their highest priorities in this time of unprecedented change. Reliable gas network information management systems and best practices relating to commodity data are more important than ever to improve or even maintain competitiveness and responsiveness in the open market environment.

One consequence of increasingly complex markets is the growing numbers of gas flow, quantity and quality measurements involved—measurements that are vital to financial accounting and subject to customer transparency. Best practices recommend the operator’s gas measurement analysis system accurately and completely collect data; validate per user-specified rules; properly flag, adjust and estimate data where needed; rigorously identify measurement imbalances and potential errors; and maintain audit reports.

One leading gas transmission company in Europe took advantage of Schneider Electric’s experience in the North American deregulated gas market by implementing a Schneider Electric-created turnkey information management solution to help it comply with liberalization mandated in Europe. The resulting monitoring and automated control system included several advanced applications for meeting customer reporting procedures and processes required by the new mandate. The system fully accepts third-party applications, eliminating costly proprietary enhancements and maintenance needed for it to be reliable for the long term.

The system also provides another best practice for safety and security: real-time, redundant backup of the transmission infrastructure’s main Control Center. Finally, the solution provides logistics capabilities that enable accurate tracking and reporting of allocations and delivery, to separate production and supply from transmission operations.

The information management solution that offers these best practices related to measurement accountability, operational flexibility and security helps the user meet global and open market trends while efficiently satisfying regional or country-specific requirements.

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[Oil & Gas White Paper] Best Practices Support Success in the Open Natural Gas Market

  1. 1. Best Practices Support Success in the Open Natural Gas Market Information management tools support responsiveness in today’s complex markets March 23, 2010 / White paper Make the most of your energySM
  2. 2. Executive summary The changes throughout the energy supply market that have resulted from business globalization require natural gas transport operators to practice flexibility. Yet they need to keep safety and security their highest priorities in this time of unprecedented change. Reliable gas network information management systems and best practices relating to commodity data are more important than ever to improve or even maintain competitiveness and responsiveness in the open market environment. One consequence of increasingly complex markets is the growing numbers of gas flow, quantity and quality measurements involved—measurements that are vital to financial accounting and subject to customer transparency. Best practices recommend the operator’s gas measurement analysis system accurately and completely collect data; validate per user-specified rules; properly flag, adjust and estimate data where needed; rigorously identify measurement imbalances and potential errors; and maintain audit reports. One leading gas transmission company in Europe took advantage of Schneider Electric’s experience in the North American deregulated gas market by implementing a Schneider Electric-created turnkey information management solution to help it comply with liberalization mandated in Europe. The resulting monitoring and automated control system included several advanced applications for meeting customer reporting procedures and processes required by the new mandate. The system fully accepts third-party applications, eliminating costly proprietary enhancements and maintenance needed for it to be reliable for the long term. The system also provides another best practice for safety and security: real- time, redundant backup of the transmission infrastructure’s main Control Center. Finally, the solution provides logistics capabilities that enable accurate tracking and reporting of allocations and delivery, to separate production and supply from transmission operations. The information management solution that offers these best practices related to measurement accountability, operational flexibility and security helps the user meet global and open market trends while efficiently satisfying regional or country- specific requirements. Adding value through enabling real-time business decisions White paper on Best Practices in the Open Natural Gas Market | 01 Supporting Enterprise Financials, Decision Making, and the Global Environment
  3. 3. Introduction Globalization is unraveling many of the paradigms relating to society, law, business, economics, and the environment. As these issues reform with a more global definition, businesses find they must move from ‘traditional’ to ‘capable’ to stay competitive in the more global markets that are evolving. This paper describes some best practices that natural gas companies are using to improve their competitiveness and responsiveness in an increasingly open—and complicated—energy market. Included is a real-world example of operations and business success based on these practices. White paper on Best Practices in the Open Natural Gas Market | 02 Supporting Responsiveness in Today’s Complex Markets
  4. 4. Be equipped for gas market deregulation and third-party usage
  5. 5. Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 04 Agile systems for ready and accurate information The open energy market presents great opportunities—and major challenges— for the gas transport company. Worldwide deregulation and liberalization means new partners, new clients, new pipeline connections between different countries, new marketers, new shippers, new competition, new sources of supply, and new procedures. Safety and security, more than ever, is a priority in this time of unprecedented change. Gas companies need an information management system that can be relied on to help make a smooth transition to such an open and complex business environment. Agile and reliable information management systems not only support secure and efficient operation of a gas network, they also make real-time data available to support operations-related decisions that contribute to customer satisfaction and help the gas business remain competitive. “Flexibility—the capacity to adapt—is a must for every information system in the gas business.” Andoni Olaizola Director of Oil and Gas Europe Schneider Electric
  6. 6. White paper on Best Practices in the Open Natural Gas Market | 05 Supporting Responsiveness in Today’s Complex Markets What does ‘responsive’ mean? The gas company adapting to these new business challenges needs to manage information in such as way as to turn data into knowledge, in real time, to be responsive and make the decisions needed to stay competitive. Such a powerful system: • Applies advanced technology and is capable of managing thousands of data points from the pipeline with accuracy • Easily accommodates updates and migrations to avoid system downtime during such maintenance • Is scalable to respond to growth; an extensible system will handle network growth and expanded volumes without excessive configuration costs • Establishes integration of real-time system data into the enterprise • Is highly secure and capable of avoiding cyber-security risks and attacks • Provides the redundancy necessary to back up any main system failure and assure uncompromised flow of the resource relied on by all facets of the community See the sidebar this page describing the successful implementation of such an information management system. Best technology practices put to work A leading gas transmission company in Europe realized its information systems needed significant upgrade to comply with the liberalization mandated in Europe’s 2001 Natural Gas Market Law. This legislation required detailed measurement, operational control, and customer reporting procedures and processes. To comply, the company’s business model underwent a total transition; since 2003, it has been operating with, and relying on, a comprehensive information system solution enabling business responsiveness. “The system we implemented offers the benefits of the vendor’s experience with the deregulated gas market in North America and its expertise in delivering a full scope, turnkey solution,” affirmed the company’s Operations Manager. “Schneider Electric has provided us with automation, monitoring and control of the supply network, and several advanced applications for meeting liberalization requirements. “We needed a system with an open architecture and one technically flexible enough to be adapted to our national market. Also, we appreciate how third-party systems have been easily integrated into the Schneider Electric solution.” He added, “We wanted a solution that would be with us for the long term and believe we have it. We have secured full operation of our infrastructure with backup of our main Control Center. The Backup Center is running in real time and can take over operations in case of an emergency.”
  7. 7. Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 06 Integrated Gas Measurement Analysis System Reliable collection and reporting of accurate measurement data Transforming a data control system to a gas business information management and knowledge support system requires advanced functionalities that specifically target industry business practices. Such a system recognizes that accurate measurement of gas flow is critical to financial accounting and closes the gap between the field and the office. A best practice gas measurement analysis system will continuously collect real- time measurements to optimize daily operations and generate accurate reports that will withstand intense financial and regulatory scrutiny. It should: • Configure measurement devices properly to eliminate reading errors • Accurately and completely collect data • Confirm data accuracy through different validation processes • Efficiently adjust and estimate to free up analysts for other tasks • Rapidly and rigorously identify measurement imbalances and alert operators to potential errors • Close functions to simplify end-of-month accounting responsibilities and save time with immediately produced reports
  8. 8. Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 07 Flexibility saves implementation and training costs In the multi-user, or third-party, open environment, business models must be adaptable; a flexible information system helps achieve that goal. According to Andoni Olaizola, Director of Oil and Gas Europe for Schneider Electric, “Flexibility – the capacity to adapt—is a must for every information system in the gas business. Although the trend worldwide is towards an open market, specific issues in each region and country exist, and it is vital that the information systems managing this industry accommodate these specific requirements.” The Operations Manager at the European gas transmission company noted earlier puts it this way: “Our old gas measurement system had been developed in-house and was expensive to maintain. Today, our system measurement potential and capabilities are greater, and flexibility allows practical adaptations. Flexibility results in cost savings.” Validation processes assure accounting integrity The liberalized market environment is seeing ever-increasing numbers of measurements, and an automated validation system flexible enough to apply user-specified rules—from simple limit checking to more complex parametric data comparisons—assures only validated data are forwarded for further business application. Further, only data that fail the specific rules are flagged, minimizing the time an analyst must devote to checks. The best practice validation process must include rigorous audit information. See the sidebar on this page for input from a Schneider Electric client on its best practice validation process. Enhanced and adapted measurement and analysis solution helps company stay current Today’s market requires management of more extensive and detailed information than was needed prior to deregulation: energy values (through calculation), gas quality data, balance data, calculated volumes (per ISO formula), gas meter classification (Daily Metered Daily Updated, Not Daily Metered, Daily Metered Monthly Updated, and Daily Metered Monthly Updated Calculated) and the spreading of monthly volumes to daily volumes. This information now is required not only for regulatory compliance but also to remain competitive in this complicated market. “Before liberalization, we owned an in-house SCADA system that collected basic volume measurements and generated reports. After the market deregulation, the gas authority seriously addressed new information requirements,” affirmed a Schneider Electric client’s Operations Manager. He added, “The authority report includes measurement parameters and values (daily/ monthly volume and energy) and daily gas quality data related to the customer device. Today, we are required by law to keep this kind of report in case of audit request, and the Schneider Electric Gas Measurement and Analysis solution helps us accomplish this. We also send this report to the customers on a monthly basis. Without having adopted this solution, we would still be spending a lot of time and effort in compiling this information; today, we are not. “Also the system gives us the capability of storing historical measurements (mainly volumes and gas quality) used to generate a five-year authority report. We have significantly improved the overall efficiency of the measurement data validation process for the information sourcing from our 1,300 kilometres of pipelines.”
  9. 9. Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 08 • Configure an aggregation of gas meters for the purpose of calculating the network balance in volume and energy; see Figure 1. • Allow gas company users to collect all the fiscal volume measurements (either from fields or manually entered) and the gas quality measurement, so as to use them to calculate the energy values for each gas meter; see Figure 2. • Generate reports, including data requested by the gas authority, to be sent to the customers, as well as reports that fulfil the transporters’ obligations to maintain archives for audit purposes • Allow the grouping of gas meters in those stations where volume and energy information is transferred to upper business information systems for commercial dispatching activities (allocations, billing, invoicing, etc.) Value-added functions of a gas measurement system in the open market Figure 1 Gas measurement system aggregation The aggregation engine of a gas measurement system continuously aggregates and maintains hourly and daily quantities based on 15-minute or hourly readings. Here, daily volumes are shown for a test gas meter in November 2009 (source: Schneider Electric Gas Measurement Euro Editor). Gas meter volumes and gas analysis of an associated Gas Quality Zone can be useful in building authority reports. Figure 2 Real-time gas volume and quality measurement Real-time gas composition analysis identifies heating values and assures accurate energy content calculation for billing and transactional balancing. Here, daily gas analysis is shown for a test gas meter in November 2009 (source: Schneider Electric Gas Measurement Euro Editor).
  10. 10. Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 09 Automating critical accounting and reporting tasks Deregulation of the gas industry in the European community is opening transportation pipelines to third-party transportation. The Third Energy Liberalization Package adopted by the European Commission in September, 2007, effectively separates production and supply from transmission networks of large, integrated energy firms. Gas companies now need to account for third-party usage of their pipelines. Operators are required to track the types and quantity of services, nominations, and contractual allocations, as well as calculate and generate customer invoices and plan for long-term pipeline usage. The gas transmission company noted earlier has adopted Schneider Electric´s Pipeline Operations, Logistics and Revenue Information Systems (POLARIS) application as a best practice that supports maximized business efficiency; see Figures 3 and 4 (next page) and the sidebar. Integrated Pipeline Operation, Logistics and Revenue Information Systems Critical and accurate information available faster than ever before The gas transmission company’s commercial solution integrates contracts, nominations, scheduling, allocations, invoicing, and revenue accounting – all to minimize entry and manual processes and add accurate, near-real-time response to reporting processes. “We have more than 400 industrial and municipal customers using our pipeline and the national pipeline network grid to transport gas throughout the country,” reported the company’s Operations Manager. “Today, our commercial solution, completely web-based, allows our customers to conduct their transactions online. In the deregulated market where there are several traders, marketers, sellers, and others, sharing information in a timely and efficient manner is vital. The POLARIS tool helps us in minimizing manual entry and improves reporting accuracy, so we can improve service to several hundred industrial customers and municipalities across the country. With key information available faster than ever before, we are best equipped to make more informed— and better—decisions.” “Full use of available technology and a relentless search for innovation are the traits that keep us on a path of ever- increasing quality of service in a cost efficient manner,” said the company’s Managing Director.
  11. 11. Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 10 Figure 3 POLARIS gas accounting and reporting The POLARIS commercial gas module is a web- based, secure environment providing an electronic workflow for new contracts, submitting and confirming nominations, actuals reporting, allocating volumes, and invoicing. Integrated Pipeline Operation, Logistics and Revenue Information Systems (continued) Figure 4 POLARIS accounting of transfers POLARIS transfer accounting is used by pipeline operators and third-party users (source: Schneider Electric POLARIS shipper allocation summary for transporters).
  12. 12. Conclusion Supporting Responsiveness in Today’s Complex Markets White paper on Best Practices in the Open Natural Gas Market | 11 Best practice solutions in a nutshell: • Companies adopting the best practices described here are equipped to face gas market deregulation and third-party usage. • The complete, integrated smart solution that delivers responsive information management will guarantee reliability, accurate automated reporting, and the best customer service. • These applications are demonstrating they add significant value by making real- time business decisions possible. Best practices support flexibility and adaptability in a dynamic market
  13. 13. Schneider Electric USA 10333 Southport Rd SW, Suite 200 Calgary, AB T2W3X6 Phone: 1-866-338-7586 Fax: 1-403-259-2926 http://www.schneider-electric.com ©2012SchneiderElectric.Allrightsreserved. August 2012

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