Tactical Portfolio Planning in the Natural Gas Supply Chain

Marte Fodstad (), Kjetil T. Midthun (), Frode Rømo () and Asgeir Tomasgard ()
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Marte Fodstad: Norwegian University of Science and Technology
Kjetil T. Midthun: SINTEF Technology and Society
Frode Rømo: SINTEF Technology and Society
Asgeir Tomasgard: Norwegian University of Science and Technology

Chapter Chapter 11 in Stochastic Optimization Methods in Finance and Energy, 2011, pp 227-252 from Springer

Abstract: Abstract We present a decision support tool for tactical planning in the natural gas supply chain. Our perspective is that of a large producer with a portfolio of production fields. The tool takes a global view of the supply chain, including elements such as production fields, booking of transportation capacity, bilateral contracts and spot markets. The bilateral contracts are typically take-or-pay contracts where the buyer’s nomination and the prices are uncertain parameters. Also the spot prices in the market nodes are uncertain. To handle the uncertain parameters, the tool is based on stochastic programming. The goal for the producer is to prioritize production over the planning period in a way that makes sure that both delivery obligations are satisfied and that profits are maximized. The flexibility provided by the short-term markets gives the producer a possibility to further increase his profits. Production and transportation booking decisions in the early periods are taken under the uncertainty of the coming obligations and prices which makes flexible and robust solutions important. There will be a trade-off between maximum profits and robustness with respect to delivery in long-term contracts.

Keywords: Portfolio planning; Natural gas; Stochastic programming (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-1-4419-9586-5_11

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DOI: 10.1007/978-1-4419-9586-5_11

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