BC gas takes new approach to gas supply optimization

Wide-ranging changes have taken place in the US and Canada since the mid-1980s in the way that local gas distribution utilities and large industrial customers contract for their gas supplies. This paper reports that these changes have been brought about by open-access policies, the intent of which was to allow customers more latitude to make their gas purchase and transportation arrangements and to improve the access of shippers to available gas transmission capacity. The effects of the new open-access regime have been profound on both sides of the border. More than 70% of North American gas supplies are now sold under unbundled arrangements in which gas supply is contracted under separate commodity and transportation agreements. For local distribution utilities, the numbers of potential supply options have become extremely large. Analysis of these options has become increasingly complex with the need to take account of complicated contract provisions, a wider range of storage options and swap arrangements with other utilities, opportunities for some customers to purchase gas directly and uncertainty about future demand, prices and supplier reliability.