Anticipating Challenges in Natural Gas-Fired Electricity Generation

Search form Search FERC Order 809 FERC Order 809 Solutions Using Data Science Solutions Using Data Science February 8, 2016 February 8, 2016 Perspective on Operating Challenges By: Rick Smead Perspective on Data Science Solutions By: George Danner

2 The Situation The Situation U.S. is making U.S. is making strategic shift to Natural Gas Fired strategic shift to Natural Gas Fired Electricity Generation Electricity Generation Success of shift depends on better coordination among Success of shift depends on better coordination among gas supplies, transport services, ISOs / RTOs, and power gas supplies, transport services, ISOs / RTOs, and power generators generators FERC Order 809 seeks to improve alignment of gas FERC Order 809 seeks to improve alignment of gas supplies with needs of power generators through: supplies with needs of power generators through: Changes to the pipeline nomination process Changes to the pipeline nomination process Finding ways to compress the timeframe between nom Finding ways to compress the timeframe between nom submissions and schedule confirmation submissions and schedule confirmation

3 Anticipate Operating Complexities Anticipate Operating Complexities Need to anticipate significant increase in Need to anticipate significant increase in Gas replace Coal Plants, at the same time that Renewable replace Coal Plants, at the same time that Renewable S Sources, such as wind and solar are moving into the same space such as wind and solar are moving into the same space This evolution has two major implications This evolution has two major implications Winter generation use of gas is increasing, competing for Winter generation use of gas is increasing, competing for capacity with heating loads capacity with heating loads Intermittent nature of renewables means that gas Intermittent nature of renewables means that gas- -fired generation operation will be more volatile generation operation will be more volatile S Service interruptions will create problems for entire supply ervice interruptions will create problems for entire supply chain chain In spite of challenges, growth in natural gas In spite of challenges, growth in natural gas- -fired power generation can provide win generation can provide win- -win opportunity for entire natural win opportunity for entire natural gas supply chain gas supply chain Gas- -Fired Plants Fired Plants to to ources, fired fired power

4 Operating Challenges Operating Challenges Changes to proven operating procedures could Changes to proven operating procedures could introduce new operating risks introduce new operating risks Less time to validate nomination data could create Less time to validate nomination data could create errors and potential legal risks errors and potential legal risks Tighter deadlines could hamper Gas Controllers Tighter deadlines could hamper Gas Controllers ability to prepare pipeline for shifts in volume ability to prepare pipeline for shifts in volume Insufficient lead Insufficient lead- -time to manage line time to manage line- -pack pack Impaired ability to ensure delivery of scheduled volumes Impaired ability to ensure delivery of scheduled volumes

5 Current Perspective Current Perspective Strong consensus that more computers will not resolve risks Existing processes are critical to ensuring correct data is used for confirmation and scheduling processes Gas Control can respond to rapidly changing situations, but only by anticipating and having enough lead time to move resources such as line pack where they are needed

6 Technology Can Be a Part of Solution Technology Can Be a Part of Solution The solution is in: The solution is in: U Using new technology to anticipate, validate, and alert sing new technology to anticipate, validate, and alert Developing capabilities Developing capabilities that O On both sides of the transaction n both sides of the transaction Prepare them for potential events, then prompt them with the Prepare them for potential events, then prompt them with the solution when the event occurs solution when the event occurs that help help schedulers and schedulers and controllers: controllers: The solution could look something like how pilots practice The solution could look something like how pilots practice responding to situations in a simulator and then respond to responding to situations in a simulator and then respond to alerts in the cockpit alerts in the cockpit

7 Visualization Makes a Difference Visualization Makes a Difference It is insufficient simply to find the right policies or operating It is insufficient simply to find the right policies or operating rules rules Many times, the challenge is gaining buy Many times, the challenge is gaining buy- -in from skeptical groups of stakeholders groups of stakeholders Experience has shown that helping stakeholders visualize a Experience has shown that helping stakeholders visualize a day in the life can break day in the life can break- -down significant communications down significant communications barriers barriers By letting stakeholders play with the rules they can: By letting stakeholders play with the rules they can: See what is happening See what is happening Understand how the policies work Understand how the policies work Build consensus Build consensus in from skeptical

8 Proposition: A GEH Simulation Proposition: A GEH Simulation Scope can range from: Scope can range from: Combinations of Gas Contracts Combinations of Gas Contracts Pipeline ecosystem Pipeline ecosystem Linked Linked gas/electric ecosystem gas/electric ecosystem Provide ability to conduct experiments with a variety of Provide ability to conduct experiments with a variety of policies policies What if this step was added to the coordination protocol? What if this step was added to the coordination protocol? Can also stress test the policies against a wide range of future Can also stress test the policies against a wide range of future scenarios, both normal and exceptional scenarios, both normal and exceptional Use Subject Matter Experts from both domains to construct the Use Subject Matter Experts from both domains to construct the model model Make it a transparent process Make it a transparent process

9 Proposition: Proposition: Create a Flight Simulator Create a Flight Simulator It is also possible to create a game It is also possible to create a game- -like interface on top of the model to turn it into an immersive exercise the model to turn it into an immersive exercise like interface on top of Companies do this to role play various upcoming Companies do this to role play various upcoming scenarios (competitive strike, new product line, scenarios (competitive strike, new product line, ) ) Could the same thing work for GEH? Could the same thing work for GEH?

10 Proposition: Compress Confirmation Process Proposition: Compress Confirmation Process Help Pipeline Schedulers expedite verification of Help Pipeline Schedulers expedite verification of nomination nomination Issue: Incomplete Issue: Incomplete or flawed service of accepted service of accepted nominations or flawed nomination nomination data could impair nominations data could impair Solution: Use Solution: Use analytics tools to identify analytics tools to identify errors and alert scheduler to problems scheduler to problems errors and alert

11 Presenters Bio Presenters Bio George is a leader in the application of Data Science tools to solve some of business most complex business problems. He has deep experience in combining analytical tools such as agent-based simulation modeling, Monte Carlo simulation, System Dynamics, Game Theory, Visualization, and Real Options with visualization tools to help clients gain better insight into the impact their strategic and operational decisions. He is the author of Profit From Science, published by Macmillan. George has 29 years of experience in corporate strategy, specifically operational and financial analysis, across a wide variety of industries: manufacturing, energy, telecommunications, transportation and financial services. He holds a Bachelor of Science in Mechanical Engineering from Texas A&M University and a Master of Science in Management from Massachusetts Institute of Technology. George Danner Chief Science Officer Rick specializes primarily in the natural gas sector, offering expert policy analysis and advice, litigation support, and strategic advice with respect to gas pipelines, potential supplies, and market initiatives. His background includes over nine years as a Director with Navigant Consulting, Inc., and over three decades in the natural gas industry. That experience included over 20 years as the chief regulatory officer for major interstate pipeline systems, with multiple experiences advising non-U.S. governments in the creation of a regulatory structure. His consulting practice has spanned the LNG industry, both for project developers and for a large national oil company, and the U.S. shale gas boom and its interaction with LNG, the pipeline industry, power generation, and other gas markets. At Navigant, he managed and co-authored the first major quantification of the U.S. shale potential in 2008, the pivotal North American Natural Gas Supply Assessment. Most recently, he has been deeply involved in the opportunities for the use of the nation s natural gas abundance, including power generation, LNG exports, and gas-to-liquids technology. He holds a Bachelor of Science in Mechanical Engineering from the University of Maryland and a law degree from George Washington University. Rich Smead Managing Director of Advisory Services RBN Energy

12 Appendix

13 Proven Technology for FERC 809 Objectives Proven Technology for FERC 809 Objectives Data Science can address FERC 809 Objectives: Data Science can address FERC 809 Objectives: FERC Objectives Compress Nomination Schedule Approval Process Risks Data Science Solutions Incomplete or flawed nomination data could impair service of accepted nominations Machine Learning to learn when confirmation data is not valid, analyze such data, and alert schedulers to potential errors Unanticipated volume changes adversely impact pipeline reliability Simulation tools for gas controllers to practice responding to potential situations and pre-plan responses for when the situation develops Real-time Event Monitoring by embedding simulation logic into appropriate operational systems, which monitor on-going transactions and alert controllers when specific scenarios are identified

14 Proven Technology for FERC 809 Objectives Proven Technology for FERC 809 Objectives Data Science can address FERC 809 Objectives: Data Science can address FERC 809 Objectives: FERC Objectives Risks Data Science Solutions Simulation tools for agents responsible for managing a pool of contracts, which allow its schedulers to practice responding to potential situations and pre-plan responses for when the situation develops Real-time Event Monitoring by embedding simulation logic into appropriate operational systems, which monitor on-going transactions and alert schedulers when specific scenarios are identified Create contracting flexibility to help entities meet their collective load obligations in a more efficient manner Improper or unpredictable use of contractual capacity impairs rights of other shippers