Gas to Power: Optimising Value in Regional Markets
Workshop overview:
Overview of Gas & Power Value Chain
Gas Fundamentals & Quality
Gas Market Supply & Operation
Power System Fundamentals
Power Technology
Overview of Market Structures
Gas market in country/region of client’s choice
Power market in country/region of client’s choice
Distribution network & storage in country/region of client’s choice
Gas & Power Commercial issues & risks
Gas & Power Contract Framework
Introduction to Client project
Client Project Structuring- Framing Workshop
Day 1
Welcome, Introductions, Administration and Confirmation of Participants’ Aims and Requirements
>> Objective: Get to know each other and the participants’ specific interests and objectives for the workshop.
• Develop group dynamics
• Understanding attendees experience
• Agree alignment on purpose
• Delegates desired objectives
Overview of Gas & Power Value Chain
>> Objective: An overview of the important characteristics which define the gas and power physical and value chains from wellhead to market.
• Role of gas in global energy balance
• Primary energy balance
• Choice of fuel for power generation
• Sources of gas supply
• Gas commercial structures & pricing
• Power commercial structures & pricing
• Future trends
Delivery: This session will be delivered through presentation format allowing plenty of time for questions and discussion around all key issues to ensure a common level of understanding.
Gas Fundamentals & Quality
>> Objective: To focus in greater detail on the fundamentals of natural gas including quality issues that may impact on the gas being delivered to a country/region and used in the power sector.
• What is Natural Gas?
• Gas Quality & Heating Value
• Wobbe index
• Gas composition – impact on gas turbines
• Emissions – Sox, NOx and Carbon
Delivery: This session will be delivered through presentation format allowing plenty of time for questions and discussion around all key issues to ensure a common level of understanding. What must the client take into consideration when selling gas to a power station?
Lunch
>> Objective: To focus in greater detail on the delivery of gas to a market and how this is distributed within the market to meet demand swings.
• Gas to market – LNG vs. Pipeline gas
• Reserves
• Regasification – input to market; power plant synergies
• Distribution – HP and LP grids
• Storage – why? types of storage
• Demand swings – seasonality, within day
Delivery: This session will be delivered through presentation format allowing plenty of time for questions and discussion around all key issues to ensure a common level of understanding.
>> Objective: An overview of the key characteristics and terminology used in the power industry.
• Power industry units
• Generation costs
• Efficiency and heat rate
• Load factors
• Merit order despatch decisions
• Spark spread
Delivery: This session will be delivered through presentation format allowing plenty of time for questions and discussion to ensure a common level of understanding. What factors will influence the contracting strategy of a fuel buyer for a power station?
>> Objective: To focus in greater detail on the technical issues that may impact on power generation in a country/region.
• Gas Fired Generation – Combined & Open Cycle, CHP
• Plant location factors
• Power generation fuels comparison
• Environmental & efficiency considerations
• Power distribution grid & transmission losses – HV/MV/LV
• Tolling plants
• Spinning reserve
Delivery: This session will be delivered through presentation format allowing plenty of time for questions and discussion around all key issues to ensure there is a common level of understanding. What choices are available to the client in determining the plant location.
Recap of Day One and Key Learns – Group discussion and capture on flip chart
Day 2
Progress against the desired outcomes and key learning objectives listed at the start of Day One will be reviewed.
Overview of Market Structures
>> Objective: To provide an overview of the different structures of gas and power market in operation around the world and their influence on power projects.
• Market liberalisation
• Regulation – traditional, intermediate and liberalised market models
• Wholesale gas pricing structures – oil indexation, Henry Hub, NBP etc.
• Merchant vs. Non competitive markets
• Power pricing fundamentals – short & long run marginal cost
Delivery: This session will be delivered through presentation format allowing plenty of time for questions and discussion to ensure everyone is at a common level of understanding
Gas market in country/region of client’s choice
>> Objective: To develop a detailed understanding of the structure of the gas market in the country/region that the client is operating in.
• Market type – regulated etc.?
• Competitive environment & market share – barriers to entry
• Inter-fuel competition
• Pricing basis
• Supply/demand projections
Delivery: Interactive discussion using criteria established in the overview session to define the key parameters of the selected gas market.
Power market in country/region of client’s choice
>> Objective: To develop a detailed understanding of the structure of the power market in the country/region that the client is operating in.
• Market type – regulated etc.?
• Competitive environment & market share – barriers to entry
• Structure of generating capacity – gas fired generation in merit order
• Pricing – inc. external factors e.g. carbon, emissions regulations, fuel import duties
• Supply/demand projections
Delivery: Interactive discussion using criteria established in the overview session to define the key parameters of the selected power market
Lunch
Distribution network & storage in country/region of client’s choice
>> Objective: To develop a detailed understanding of the structure of the distribution networks for gas and power in the country/region that the client is operating in.
• Gas & power grid ownership
• Third Party Access rights
• Gas shipper obligations
• Supply interruption risk
• Gas storage availability & ownership
• Power generator obligations to grid owner
• Power transmission constraints
Delivery: Interactive discussion using criteria established in the overview session to define the key parameters of the distribution networks in the selected market
Gas & Power Commercial issues & risks
>> Objective: To develop an understanding of the commercial structures and risks for a gas producer and power generator in the country/region that the client is operating in.
• Where/when to sell the gas? – direct to station, DES, FOB
• Who is my counterparty – state owned or private utility, merchant market
• Basis of pricing – indexation, traded gas etc
• System entry requirements – credit, balancing market
• Supply/demand interruption – Take or Pay, alternative markets
• How to manage seasonal demand variation?
• Gas/power arbitrage – when to sell gas or generate the power?
Delivery: Interactive discussion to define the key issues and risks when developing the commercial structure for a gas supply and/or power generation project in the selected market
Gas & Power Contract Framework
>> Objective: To determine the Buyer and Seller’s objectives in the key contractual terms and conditions to be included in a Sale and Purchase Agreement for a gas fired power plant in the client’s country/region.
• Contract term
• Quantity & scheduling
• Nominations
• Pricing and reviews
• Force Majeure
Delivery: Interactive discussion to develop a list of key contract terms and conditions and to understand how the power Buyer and gas Seller would respectively seek to mitigate the risks identified in the previous session
Recap of Day Two and Key Learns – Group discussion and capture on flip chart
Day 3
Day Two Review
Progress against the desired outcomes and key learning objectives listed at the start of Day One will be reviewed.
Introduction to Client project
>> Objective: Provide a common understanding of the client’s prospective project(s).
• Objectives
• Timing
• Size
• Counterparties
• Risks and alternatives
Delivery: Client presentation of project parameters and group discussion to ensure common understanding.
Client Project Structuring- Framing Workshop
>> Objective: Facilitated activities including brainstorming, breakout sessions and plenary discussion. The participants will apply the key messages and learnings to the client’s project objectives and prepare an outline development proposal.
• What are the key risks?
• What are the critical success factors?
• What more do they need to understand?
• What are the next stages of development?
Feedback
Review of the desired outcomes and key learning objectives listed at the start of Day Three – have these all been met?
• Completion of feedback forms
Discussion – What went well, not well and what should be changed?