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

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

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

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.
Supporting Responsiveness in Today’s Complex Markets

Be equipped for gas
market deregulation
and third-party usage

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

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.”

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

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.”

• 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).

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.

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).

Conclusion
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

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

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

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