Gas Transmission Investment Programme
The Gas Transmission Investment Programme (GTIP) is Gas Industry Co’s response to industry concerns over the long-term outlook for gas transmission capacity availability in the Auckland region. This work has its origins in 2009, when Vector announced to the industry that it would no longer be able to sell new capacity on its North Pipeline as that pipeline has reached the limits of its capacity.
Objective
The objective of the GTIP is to:
- ensure that existing and future gas transmission assets are used efficiently;
- establish the need for gas transmission investment; and
- develop an effective pathway for efficient gas transmission investment to take place.
Structure and Governance
The GTIP is structured as a package of interconnected projects:
- Information Projects: to minimise information asymmetries;
- Market Projects: to provide efficient market design; and
- Regulatory Projects: to define appropriate regulatory arrangements.
Two working groups have been developed to provide advice to Gas Industry Co in relation to the GTIP:
The diagram below illustrates the GTIP structure and governance.
GTIP Structure and Scope paper and review
Gas Industry Co has prepared the paper: Gas Transmission Investment Programme - Structure and Scope. The aim of the paper is to provide:
- a clear objective and scope for the Programme;
- further detail on the GTIP governance arrangements and component projects; and
- a detailed work plan.
The scope of projects identified in the paper will be reviewed by the Panel of Expert Advisers (PEA). Any advice the panel has on revising the scope will be considered by Gas Industry Co before the scope of the GTIP is finalised.
Background to this work
Gas Industry Co has been working on transmission pipeline capacity issues for several years. Our work in this area has sought to address both short and long-term issues that have arisen from the North Pipeline constraint. In relation to the short-term, large end users on the North Pipeline have experienced a reduction in the number of credible bids they receive when seeking a new gas supplier. Gas Industry Co's investigation of this situation prompted key industry members to put in place a set of commitments known as the, 'Bridge Commitments'. Gas Industry Co is monitoring the market to assess the effectiveness of these commitments.
More information on this work can be found here: Short-term Capacity Workstream
In relation to the long-term, Gas Industry Co has investigated Vector's access regime and developed various options for improving the performance of the regime. Stakeholders have participated in this work through various workshops and consultation papers. At an April 2011 workshop, attendees strongly endorsed the need for a more holistic approach to finding solutions to the longer-term transmission capacity issues. It was proposed that Gas Industry Co lead a structured programme of work, and subsequent industry submissions endorsed an outline for the GTIP prepared by Gas Industry Co.
More information on this work can be found here: Long-term Capacity Workstream
Transmission Update and Workshop on Gas Supply/Demand
Morning session: Transmission Update
Afternoon session: Gas supply/demand workshop
Workshop on Demand Management and Transparency
On Tuesday 15th January 2013 a workshop was held relating to Demand Management and Transparency.
Here are two presentations from this workshop
Demand Management and Transparency
GIC Physical Constraint Management
These are issues that the PEA are providing advice on and their work can be found here
Information Projects
- Vector's capacity determination;
- Supply and demand outlook;
- Transmission market disclosures; and
- Backstop information gathering and analysis.
Amended Final Report: Gas Supply and Demand Scenarios
Amended Gas Supply and Demand Scenarios 2012 - 2027 (March 2013)
Concept Consulting has amended its gas supply and demand study to include an analysis of the demand on the Maui pipeline north of the Mokau compressor. Gas Industry Co has commissioned this addition in response to feedback on the original report. This analysis is contained in Appendix D of the revised report (note that the rest of the report remains unchanged). The analysis develops projections for annual and peak day demands on the Maui pipeline north of the Mokau compressor station, taking account of trends in generation demand, coal prices, and carbon dioxide prices.
The modelling tool has been updated to include the Maui pipeline analysis. To download the model, visit: https://docs.google.com/folder/d/0B8Fpt8nHFgDZdU1VbzZ6M0pLcjA/edit The model consists of an Excel file and a supporting Access database. The files are compatible with Excel 2007 (and above) and Access 2007 (and above).
Download the two files labelled 'Gas_dem_sum.accdb' and 'Gas_Dem_v22.xlsm' by clicking on them (the folder labelled '20121129 Release' contains the original model and database released in November 2012).
Click 'Download'. A window may appear stating it is too large to be scanned - click 'Download anyway'.
The Access file must be saved to the same folder as the Excel file for the model to work properly. Also, both files should not be marked as Read-only (to check, right-click the file in the file list, click Properties, then make sure that the Read-only box on the General tab is not ticked).
The Access document may open automatically and request a password but can be closed as it does not need to be open for the model to work; simply open the Excel file called Gas_Dem_v22.xlsm. The first tab in the Excel file consists of notes about the model and the second tab is a diagram of the model.
Final Report: Gas Supply and Demand Scenarios
Gas Supply and Demand Scenarios 2012 - 2027
The report has been produced by Concept Consulting Group and is the first substantive look at gas supply and demand in New Zealand. The report includes national gas supply/demand scenarios, regional gas demand scenarios, and peak demand projections that can assist the industry and large users to assess the need for, and timing of, investment in pipeline infrastructure.
In response to requests from submitters, the final versions of the report and associated model include more information on the data inputs and modelling results:
- The modelling tool (available online; directions for downloading it are below) now includes a separate tab that contains historical and projected data tables. Stakeholders can use these data tables in their own analysis and business planning.
- The analysis of industrial and commercial boilers has also been discussed in greater detail in the final report.
Previously Consulted On
Gas Supply and Demand Scenarios 2012-2027
Gas Industry Co has released a draft report, "Gas Supply and Demand Scenarios 2012 - 2027," for public comment. The report has been produced by Concept Consulting Group and is the first substantive look at gas supply and demand in New Zealand. Gas Industry Co commissioned the report to develop a set of national gas supply/demand scenarios, regional gas demand scenarios, and peak demand projections that can assist the industry and large users to assess the need for, and timing of, investment in pipeline infrastructure.
- New Zealand's gas supply position is stronger than it has been for many years, driven by the highest level of exploration effort seen for a long time, which in turn has been driven by high oil prices.
- Greater gas availability in recent years has been reflected in softer wholesale gas prices relative to earlier levels (albeit above the 'low gas price' scenario). Current indications are that these conditions are likely to continue for some years.
- Long-term gas demand in New Zealand is likely to vary significantly between the different price scenarios, ranging from 250 PJ/year in the low price scenario down to 75 PJ/year in the high price scenario.
- The sectors most sensitive to changes in wholesale gas prices are petrochemical manufacturing (especially methanol production) and power generation. The demand variability in response to gas prices - and therefore supply - acts as a 'shock-absorber' to the gas market, providing a volume market for gas when it is plentiful and relatively inexpensive, but reducing demand if reserves become scarce. This helps to underpin gas exploration and development activity and can provide a buffer to extend the remaining life of existing resources if reserves to production ratios start to decline.
- Gas demand for other industrial, commercial and residential users is relatively steady across the scenarios, reflecting the relatively strong competitive position of gas versus alternative fuels for the provision of energy services.
- The existing pipeline system is expected to have sufficient capacity to accommodate the projected scenarios with higher demand, with the exception of Vector's northern pipeline system (from central Waikato northwards), which has already reached its capacity limit during peak weeks, and it appears that some potential new gas demand is being suppressed in this region through an inability to secure pipeline capacity.
- However, some gas users (e.g. power generators) appear to have relatively low cost options to reduce their usage during peak demand periods. If this potential can be harnessed, the need for costly new investment could be deferred for many years.
Submissions received
Vector Pipeline Capacity Consultation
Vector Ltd has commenced a comprehensive consultation with industry participants as part of its process to determine available pipeline capacity, particularly as it relates to the North Pipeline. Details of this process are available on Vector's website
Backstop Information Gathering and Analysis Workstream
The Backstop information gathering and analysis workstream is currently underway. The work is being pursued in parallel to the GTIP and will apply to all areas of Gas Industry Co's work. With respect to the GTIP, this information gathering process (or any regulation implemented for this purpose) has the potential to assist in the development of market arrangements - that could lead to improved availability of information in the market. More information on this work can be found here: Policy Development and Information Gathering
Market Projects
Purpose of the Market Projects: to provide for efficient market arrangements to allow an efficient allocation of transmission capacity and signal the need for new investment.
In the paper: Gas Transmission Investment Programme - Structure and Scope, Gas Industry Co identified one Market Project, Transmission Access and Pricing.
Previously Consulted On
Review of Transmission Access and Capacity Pricing: Advice from the Panel of Expert Advisers
Analysis of Submissions 5 March 2013
Letter to submitters from Dr Graham Scott, PEA Chair, and Steve Bielby, dated 22 November 2012.
Following establishment of the Gas Transmission Investment Programme in September 2011, a Panel of Expert Advisers (PEA) was established to provide advice on a range of market design issues. The first key deliverable of the PEA Work Plan is presented here. It is a report from the PEA to Gas Industry Co that proposes a 'straw man' for improvement to gas transmission access and pricing arrangements.
Submissions on the PEA report closed on Friday 24 August 2012.
Submissions received
Regulatory Projects
Regulatory Projects
Purpose of the Regulatory Projects: to define appropriate regulatory arrangements that support efficient investment in transmission infrastructure.
In the paper: Gas Transmission Investment Programme-Structure and Scope, Gas Industry Co identified one Regulatory Project, Tesing Investment Options.
Advisory Panels
Overview
Panel of Strategic Advisers (PSA)
The Panel of Strategic Advisers, comprising senior stakeholder executives, provides programme oversight. The PSA is chaired by Gas Industry Co Independent Director Andrew Brown.
Panel of Expert Advisers (PEA)
Panel of Strategic Advisers
The Panel of Strategic Advisers (PSA), comprising senior stakeholder executives, provides programme oversight. The PSA Members and Chair are as follows:
- Andrew Brown (Chair)
- Allan Carvell (nominated by Vector Limited)
- Doug Watson (nominated by Major Gas Users' Group)
- Duncan Jared (nominated by MRP)
- Hayden Laird (nominated by Greymouth Gas)
- Malcolm Alexander (nominated by Genesis Energy)
- Murray Jackson (nominated by Shell)
- Sharon Wray (nominated by Contact Energy)
The PSA Terms of Reference can be found here:
Meetings
| # | Meeting Date | Meeting material |
| 3 | Wednesday 12 December 2012 | |
| 2 |
Friday 6 July 2012
|
|
| 1 | Monday 19 December 2011 |
Panel of Expert Advisers
Workshop
On 11 April 2013 GIC held a workshop with industry participants to review and discuss the progress and direction of the Transmission Access and Capacity Pricing project, which is part of our Gas Transmission Investment Programme (GTIP).
11 April 2013 Workshop Presentations (zip folder)
Key Documents
- Graham Scott (Chair)
- Brenda Talacek (nominated by Vector Limited)
- Bruce Girdwood (nominated by Vector Limited)
- Charles Teichert (nominated by Todd Energy)
- Don Gray (nominated by Maui Development Limited)
- John Small (nominated by Major Gas Users' Group)
- Nick McDougall (nominated by OMV)
- Roger Johnston - appointed 24 October 2012 (nominated by Genesis Energy)
- Stuart Dickson - appointed 24 October 2012 (nominated by Powerco)
- Ross Parry (nominated by Genesis Energy; served on the PEA from September 2011 until September 2012)
Meetings
|
# |
Meeting date |
Meeting material |
| 17 | Monday 6 May 2013 | |
| 16 | Monday 8 April 2013 | |
| 15 | Friday 15 March 2013 | 15 March PEA Meeting Material |
| 14 | Thursday 21 February 2013 | |
| 13 | Tuesday 29 January 2013 | |
| 12 | Tuesday 4 December 2012 | |
| 11 | Friday 2 November 2012 | |
|
1 |
|
25 September PEA Meeting Material |
| 9 |
Thursday 14 June 2012 |
|
| 8 | Thursday 7 June 2012 | |
| 7 | Monday 7 May 2012 | |
| 6 | Monday 2 April 2012 | |
| 5 | Thursday 8 March 2012 | |
| 4 | Monday 20 February 2012 | |
| 3 | Friday 16 December 2011 | |
| 2 | Monday 7 November 2011 | |
| 1 | Thursday 13 October 2011 |