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The North American Regional Gas (NARG) Model
Producers own natural gas resources in various basins in North America.
They must monetize those resources to generate profits and shareholder value, and their ability to do so depends on the
forward market price in the region where they are located and the cost to produce them.
Pipeline companies own gas transmission assets, and they must likewise monetize those assets to create profits and shareholder value.
Their ability to do so depends on the forward market price at the downstream end of their pipe minus the forward market price at the
upstream end of their pipe. Trading companies own "paper" assets that must be bought and sold in order to monetize them.
Profitability depends on forward market prices from which paper assets derive value (hence the term "derivative." Consumers must
shop prudently and accurately for the lowest cost gas available, and their ability to do so depends on the forward
market price in the
region in which they operate. Vince Lombardi once said: "Winning isn't everything, it's the only thing," Altos observes: "Price isn't
everything; it's the only thing." Altos' NARG is the premier forward price prognostication tool in the natural gas industry.. Kathy Abbott,
former Enron Vice President now Columbia President, told Altos' Dr. Nesbitt that NARG is the only tool in the industry that can truly
calculate market clearing prices and basis differentials among producing and consuming regions and thereby properly value gas asset
NARG simulates how regional interactions between supply, transportation, and demand interact to determine market
clearing price, flowing volume, storage injection and withdrawal, and reserve additions.
The geographic scope of the NARG model is indicated in the schematic map. (NARG is actually more detailed than the map.)
In its original long-run form, NARG represents a forward time span of thirty years or more. In its newer short run form, NARG represents month-by-month a forward time span of 36 months, taking account of market region and production region storage injection and withdrawal as well as supply, transportation, and demand. NARG has been in continuous existence since 1983 and has been used for every pipeline expansion decision and most of the resource basin profitability evaluations in North America since that time.
Electricity data:
NARG comes to you fully equipped with the best and most tested natural gas data available.
- Altos has an agreement with the United States Geological Survey (USGS) whereby the USGS delivers to Altos its best and most
current United States natural gas supply data.
Derived from detailed probabilistic analysis of an astounding 575 plays that comprise the
United States gas and oil resource base, the USGS data lies at the heart of Altos' reference case resource database.
- Altos also has an agreement with the premier energy organization in Canada,
the National Energy Board, to provide the entirety of its Canadian gas supply, pipeline transportation, and demand data.
- Altos has the best and most current pipeline data in North America. Altos and our clients continually revise and update the transportation data including capacity (obtained by continual downloading of EIA data), tariffs, embedded cost, discounting behavior, dates of entry of prospective new pipelines, and costs of those new pipelines. To populate the demand side of NARG, we download EIA and GRI demand data by segment. All NARG data can be amended element by element to substitute client-proprietary considerations and to represent uncertainty.
Altos offers NARG in several ways:
(1.) We offer a software license that allows for ongoing, inhouse, independent use by your staff, including all supply,
transportation, and demand data.
(2.) We use NARG in concert with and as part of our consulting assignments with no requirement that the client
take delivery of the model.
(3.) Altos offers previously prepared NARG runs made under Altos' reference case assumptions.
(4.) Altos offers the underlying gas supply, transportation, and demand data base on a
standalone basis completely distinct and unbundled from the NARG model. NARG is now implemented within MarketPointTM,
a new proprietary software system that allows full graphical implemention of regionality and technology, full Excel
emulation of inputs and outputs, and fully automated reporting of model results.
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say
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"... one of the premier analytical consulting firms with significant capability to come up with innovative and unusual solutions. Of particular relevance has been their ability to come up with innovative approaches to problem solving."
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IE Industries
Rénè Males,
President,
Generating and Engineering
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Advanced Starting Point.
Winners like Altos keep at hand a portfolio of past
successful solutions that are proven and already working. We extract pieces to create customized solutions to new problems, saving time, increasing accuracy, and giving our customers an advanced starting point. We reuse, reapply, integrate, and augment pieces of the old portfolio, expanding our tool kit systematically as we do so. Winners like Altos provide data, information, intelligence, and knowledge products that start "70 percent of the way there" so that our customers only have to customize the last 30 percent and so that they can begin to make better decisions from the first day of the Altos project.
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decisions
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Dominion Energy has licensed the MarketPoint model for internal use and hired Altos on a consulting basis to conduct increasingly extensive, increasingly detailed, ongoing market analysis of North American energy both in its own region of operation and other regions.
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