energy trading systems exam 1

Know the name of the ETRM system that you are using for lab.

Energy Trading Risk Management- Gas Trak

Know what city is considered the Energy Capital of the World.

Houston, Tx

Know what FERC stands for.

Federal Energy Regulatory Commission. They regulate interstate transmission of gas and electricity

Know what Hydraulic Fracturing is and what it has meant to the Natural Gas Industry. -

Also known as Horizontal Fracking. Engineer takes the gas out of rocks. Completely changed and reconfigured the industry. This process can often allow economic gas production in formations which otherwise would not be economic to produce.

What is the process of fracking?

1. First the well is drilled vertically, and once the desired depth is reached the well is then drilled horizontally.

2. After pipe has been inserted into the well and cemented in, perforations are made in the pipe and cement in the sections where gas flow is desired using a device called a perf gun.

3. Next a mixture of fluids including water and chemical additives are pumped into the well at high pressure. The fluids flow through the pipe and out the perforations. Given the high pressure of the fluids, this causes fractures in the rock.

4. In addition to the fluids, a solid material like sand or beads is injected to prop the cracks open.

5. When the fluids are pumped back out of the well, gas flows into the pipe through the newly created fractures, and then to the wellhead.

Know what the number one supply chain in the United States is.

Natural Gas Industry

Know what country is the largest gas producer in the world today.

United States. We produce more than anyone in the last 3 years

Know the two major eras in the history of Natural Gas

Deregulation:(1938-1984) A period where there were no rules or restrictions. (Producers-Processors- (Marketers)- End Users)

Regulation: (1992- Current)A period when rules were implemented (Producers- Pipelines- End Users)

Know the three major parts of the gas industry and their different stages.

Acquisitions:

Supply Commodity- the actual units of gas produced or purchased.

Logistics:

Processing Services- Making the gas market ready

Transportation Services- Moving the gas from supply to demand

Storage Service- Storing gas for peak period needs

Dispositions:

Demand Commodity- Actual units of gas sold or consumed

Know the five moving parts of the gas industry and their definitions.

??

Know the three Pipeline types.

Gathering Pipeline Systems:

Small Diameter

Processing Plants

Common Point Meter

Transmission Pipeline Systems-

Large diameter

Crosses state line

Long hauls

Distribution Pipeline Systems-

Small diameter

End of line

End-user delivery

City Gates

Know what Natural Gas is considered once it has been processed.

Market Ready

Know the difference between NGL and LNG.

LNG- Liquefied Natural Gas: Gas that has been converted to a liquid form for the convenience of storage and transport

NGL- Natural Gas Liquids: Components of natural gas that are separated from the gas state in the form of liquids. By-products extracted from Natural Gas, i.e. ANES. (ex. Propane, Ethane, Butane, Pentane, Nitrogen)

Know why one of the major parts is called acquisition and not purchase.

Acquisitions- gas you require regardless of purchase. Recieving resources but not buying it

Know where the predominant number storage facilities located for meeting peak and seasonal demands.

Seasonal Demand- Most storage are located underground, commonly in depleted gas or oil reservoirs. Traditionally held in the Summer, til needed in the Winter

Peak Demand - the increase/decrease in a day. .

Know where the predominant supply and demand areas are located.

Supply = located in the South

Demand= located in the North

Know where storage is located (i.e., closer to supply or demand).

Located in the North, closer to Demand.

Know what percentage of IT Projects fail at some level.

75% of IT Projects Fail, but 60-70% of all IT Projects fail at some level

Know what propels natural gas to its destination.

Compressor Stations provide the power that drives Natural Gas to its destination. A facility that propels gas through transmission lines or into storage by increasing pressure.

Know what Pipeline Pigs are used for.

A device used to clean and inspect the inside of the pipeline. Pigs may be used in hydrostatic testing and pipeline drying, internal cleaning, internal coating, liquid management, batching, inspection .

Intelligent Pigs

Go one step further and transmits data regarding the internal conditions of the pipeline back to the pipeline operator

Know what Compressor Stations use for fuel.

Natural Gas

Know what could happen to gas customers if gas is not delivered to them during frigid weather.

They die

Know who the number one consumer of gas today is.

#1 Electric Generation Customers (Electricity)

#2 Industrial Customers

#3 Residential Customers (family homes)

#4 Commercial Customers (retail establishments, restruants, hotels, office buildings, etc.)

#5 Natural Gas Vehicles (cars and trucks)

Know when storage injections are greater (winter or summer).

Summer

Storage Injections

the process by which natural gas is forced back into a reservoir for storage purposes.

Know what class of gas customers consumes more gas during summer and winter.

Summer= South (high demand created by air conditioning)

Winter= North (high demand created by space heating)

Know what a buy sell is

When you buy and sell at the same point.. Purchase from one supplier and sell to one distributor

Know the two types of planning model/types.

Long term and Short term planning models

Know about Bid week. When does it occur and what is its purpose?

Base loading end of every month.

The period near the end of each month when the bulk of contracts for monthly gas supply for the following month are finalized.

Know what morning meetings are and when they happen.

Morning meetings happen in the morning, used to plan the day's activities. Gets everyone together to discuss the demand change and plan the next day.

Know what MCF, BTU and MMBTU represent.

BTU= (Factor) that is used in determining value

MCF= (Quantity) how gas is measured

MMBTU= (Value/Quality) we buy from the quality of this

Know how to determine (calculate) MMBTU given an MCF quantity and a BTU Factor.

MCF x BTU = MMBTU

MMBTU/BTU = MCF

Know the difference between quantity and quality of gas.

Gas is bought and sold on quality

MMBTU=Quality

MCF=Quantity

Know how gas is measured in the pipeline and what the quantities are called.

Either measured by volume or energy content. Measured with orifice plates, measured by MCF's

Know about Orifice plates and their purpose.

device used for measuring flow rate, for reducing pressure or for restricting flow. Either a volumetric or mass flow rate may be determined, depending on the calculation associate with the orifice plate

Know what a Christmas Tree is in the Natural Gas Industry.

A well regulator, measures how much gas/oil comes out of the well. Is an assembly of valves, spools, and fitting used for a gas well and other types of wells. It was named for its crude resemblance to a decorated tree.

Know the differences between Legacy, GISB and NAESB Purchase Contracts.

Legacy Purchase Contract

Single purpose contracts - Purchase Only

Firm Purchase Agreement

Generally longer term in nature and used as base load gas

Assures delivery on a guaranteed basis other than an Act of God

Highest performance priority

Legal Recourse is generally available for Non-Performance

Keep-Whole Provision

Non-Firm Purchase Agreement (Spot / Swing)

Generally shorter term in nature and provide greater flexibility

Assures delivery on a best efforts basis

Subject to being cut or zeroed out

No legal recourse available for Non-Performance

Non Performance resolved via penalty

GISB Purchase Contracts(1996)

Gas Industry Standards Board (GISB)

Dual purpose contracts - Purchase and Sales

Standardized the contract language

NAESB Purchase Contracts(2002)

North American Energy Standards Board

Dual purpose contracts- Purchase and Sales

Non Performance resolved via Keep-Whole

Optimized Settlement Process via Net Invoicing

Know the properties of Commodity and Demand charges.

Commodity charge - this is an amount paid by the shipper based only on the actual capacity used on a given day

demand charge - this is an amount, based on capacity contracted that must be paid whether the shipper used the capacity or not. this is also known as a reservation charge because it entitles the shipper to reserve space on the pipeline

Know the differences between purchase, logistical, landed and sales price.

Purchase Price: The cost to acquire supply units

Logistical Price: The cost of supply to demand (transport/processing/storage)

Landed Price: The All-In-Price

Sales Price: Negotiated Price

Know the purpose that NYMEX, ICE and Platts serve in the industry.

NYMEX- lets you do physical trades

ICE- blind trade online

Platts- calculates the daily index

3 Fundamentals

-Supply

-Logistics

-Demand

How does energy flow?

Production to Consumption

3 Streams

-Upstream

-Midstream

-Downstream

3 Markets

-Production

-Wholesale

-Consumption

3 Pipelines

-Gathering

-Transmission

-Distribution

The energy capitol of the world is____.

Houston, TX

What is the future of energy?

Runaway industry regardless of form

ETS is focused on

"making you an asset from day one"

FERC stands for

Federal Energy Regulatory Commission

What pump is for lazy gas?

Horse head pump

Henry Hub

a natural gas distribution hub in Louisiana; it is ground zero for pricing

Field Processing

-Cost Basis

-Gravity filters

-Scrubbers

-Heater Filters

-Liquid Separators

Plant Processing

-Fee Basis

-Gasoline Plants

-NGL Plants

-Liquid Separators

Natural Gas is mainly___

methane

2 Types of Energy

renewable and nonrenewable

Where do you find city gates?

distribution/demand area

Main location for storage?

Demand

What are pigs used for in pipelines?

-Intelligent Pigs: determine thinness in the pipes

-Cleaning Pigs: clean the pipes

IntrAstate Pipelines

pipes do not cross state lines; regulAted by stAte

IntErstate Pipelines

pipes cross state lines; govErned by FERC

What is the solid black hydrocarbon, that is found near the surface of the earth called?

Coal

What is the main concern for the gas and pipeline industry?

Safety

Which of the 3 fundamentals have 3 components?

Logistics

3 Components of Logistics

-Transport

-Processing

-Storage

Who said "If you cant explain it simply, then you simply don't understand" ?

Albert Einstein

How is gas measured?

MCF x BTU = MMBTU

MCF is equal to

1000 cubic ft

BTU (British Thermal Unit)

amount of energy needed to cool or heat 1lb of water by 1 degree Fahrenheit

MMBTU

1000 Energy Units at 1.0 BTU

GasTrak

ETS used for labs

Which major Natural Gas Fundamental Area can you find City Gates and distribution activity?

Demand Side

What innovation has made the United States the top oil and gas producer of the world?

Shale Oil, Fracking, Hydraulic Fracking

What country is the largest oil & gas producer in the world today?

United States

Periods of the Natural Gas Historical Timeline.

-1800: Non-regulated, wild wild west

-1930: Regulation, Overly so

-1980: De-regulation, Kind of

Regulated supply and demand but not transport

-2000: Fracking, new ball game

-2020: LNG Market, Hello World Delivered gas around the world

What does LDC stand for?

Local Distribution Company

Gathering Pipeline

Upstream

Small diameter

Processing Plants

Common Point Meter

Transmission Pipeline

Midstream

Large Diameter

Cross state lines

Long Hauls

Distribution Pipeline

Downstream

Small Diameter

End of the line

End User Delivery

City Gates

Which of the three pipelines have similar characteristics>

Gathering and Distribution

Where are the predominant number of storage facilities are located?

North- they store it until demand is higher

What is the name of the facilities that propel natural gas to its destination?

Compressor Stations

What gas is called once it has been processed at a plant?

Market Ready

What do Compressor Stations use for fuel and what is their primary purpose?

-use Natural Gas

-drives natural gas to destination

Are Operational personnel concerned with Gas Ownership?

No

What could happen to gas customers if gas is not delivered to them during frigid weather?

Death

Who is the new player at De-regulation.

Marketers

Which type of meter is used in determining leaks.

Check Meters

What are the two types of planning model/types?

Long Term: 1-3 years

Short Term: Day to day/Month to month

Bid-week

When it occurs: Last week prior to the month

Purpose: bulk of contracts for monthly gas supply for next month are finalized

What are Morning Meeting for ?

Planning for following day's operations and trading

Difference between quantity and quality of gas, and what each is called.

MMBTU- Quality

MCF-Quantity

What is a Christmas Tree is in the Natural Gas Industry?

Equipment that controls the flow of pipes produced by a well and controls high pressure wells

GasTrak

Know the name of the Energy Trading System that you are using for lab.

Houston

Know what city is considered the Energy Capital of the World.

The Federal Energy Regulatory Commission (FERC)

Know what FERC stands for.

Is an independent agency that regulates the interstate transmission of natural gas, oil, and electricity.

Know what FERC's role is in the industry.

Interstate pipelines

Know what pipelines that cross state lines are called.

Also known as Horizontal Fracking

Engineer takes the gas out of rocks.

Completely changed and reconfigured the industry. This process can often allow economic gas production in formation which otherwise would not be economic to produce.

Recent innovation (2000s)

Know what Hydraulic Fracturing is and what it has meant to the Natural Gas

Industry.

Shale oil from fracking

Know what has made the United States the top oil and gas producer of the world.