The Changing World of Europe's Asstes
In order to give us a better understanding of the European energy market, both present and
future, the gas toolbox was conceived. The specification was to develop a system to enable us to
visualize the demand and supply characteristics of the European gas market and to economically
model the gas network system. A number of scenarios would be created to model the effects of
different market conditions. Under these market conditions, demand and supply figures could
then be predicted over a twenty-year period. The GIS would allow users to visualise the changing
supply and demand balance for the European gas market in granular detail. The specification
included a network model of European gas transportation tariffs. This presented us with an
opportunity to test the network analysis functionality of ESRI’s ArcGIS software.
The Approach
The requirements of the analytical and predictive components of the gas model were largely the
driving forces behind the data and functionality that were chosen. From an early stage it was
agreed that the economic models would be created within Microsoft Excel and the spatial data
visualized in the ArcMap component of ArcGIS. An interface would need to be developed to
allow the results of the spreadsheets to be uploaded into the GIS. The underlying Excel
spreadsheets fell into three categories:
(I) Asset Based Foresting Model (ABFM)
A forecasting model for gas demand was developed in Microsoft Excel for each of the seven main
gas markets in Europe (UK, Belgium, Netherlands, France, Germany, Spain and Italy). Each
model contained up to four different scenarios of future gas demand, (i) High and flat gas prices,
(ii) Low and volatile gas prices, (iii) A ‘green’ scenario that maximized the environmental
contribution from gas, and (iv) a ‘secure’ scenario, where priority was given to the role of gas in
long term energy supply security. A bottom-up approach was adopted that allowed us to focus on
individual plants in each of these countries and allocate gas demand to gas reception terminals or
import routes. At the same time, gas demand was integrated within the wider energy market
context, taking into consideration coal, oil and renewable energy sources. The flexible nature of
the ABFM enabled us to analyse development needs for future network and import/reception
capacity investments as well as gas fired power stations in the electricity sector (see Figure 2).
Figure 2 - Calculating future gas demand for each power station in the ABFM
(II) European Gas Traiff Model (EGTM)
In addition to the ABFM, gas tariff models were created in Excel for each of the seven gas
markets. The models were initially seeded with published tariffs for annual unmodulated gas
delivered to city gate. However, they were designed to be flexible enough to accommodate
changes, for instance if tariff systems altered at a later date, or if the user wanted to test their own
assumptions about future tariff levels and regimes.
(III) Long Ran Breakeven Cost of Supplay Model
The third Excel model detailed annual gas supply volumes and long run breakeven prices for
discoveries, producing, planned and yet to find gas assets in the North Sea. Additional fields in
Russia and Algeria were also modelled. Each supply asset was allocated to a gas reception
facility on an economic basis. Sufficient supply volumes were identified and modelled to ensure
that gas demand in the highest volume scenario would be exceeded by at least 10%.
