|
|
|
|
|
|
Altos World Gas Trade Model (WTGM)
In 1990, we began a world gas trade program that linked together a number of regional submodels to create a comprehensive, integrated World Gas Trade Model (WGTM).
Since its inception, the Altos WGTM has provided answers to the critical world gas questions:
Production:
- In every producing basin in the world, what is the forward price of gas, and how will it evolve into the future?
- What volume of gas will the market be willing to absorb at that price, i.e., what is the size of the gas market at each producing basin worldwide?
- How will each local market divide between local use, overland pipelines, and LNG?
- What will the production cost be in each basin?
- As producing basins are exploited, what will be the forward time schedule of production cost?
- What will profits (price minus production cost) be?
- How will profits differ among alternative producing regions or prospects, i.e., which producing basins offer the highest profit potential?
- How much will profits differ between existing and incremental new facilities?
- How much are reserves in the ground, producing assets, and acreage worth?
- If a company were to purchase reserves, what is the maximum amount it should be willing to pay?
- If a company were to sell reserves, what is the minimum amount it should be willing to accept?
- Which announced projects are winners and which are losers?
Markets:
- For each existing and prospective producing region around the world, what is the "natural market" for gas leaving the region, i.e., toward which market will the gas gravitate?
- To what region will it be transported?
- At what volumes?
- What price will be received in each market?
- What are the competing sources in each market and how will they affect gas price?
- What is the forward market price of gas at each existing and prospective import point in the industrialized countries (the United States, Canada, Japan, Taiwan, Korea, Europe)?
- How much gas will be imported at that price?
Transportation Volumes, Routes, and Margins:
- There is gas likely to flow regionally and worldwide?
- What are the economically viable
"from's" and "to's" in the Atlantic rim, the Pacific rim, and elsewhere and how will they evolve over time?
- What margins are available to transporters along these and other (noncompetitive) routes?
- What will be the transportation value along meach route and in aggregate over all routes?
- How much shipping capacity will be required and when?
How Are Gas and Oil Prices Related?
-
Under what conditions (if any) will gas and oil prices be coupled?
- Will gas-on-gas competition in domestic markets drive the fair market value of gas at LNG import terminals below the price of oil?
- Will it compress LNG prices and margins to producers?
- How profitable will oil be relative to gas?
- Should producers continue to search for oil, viewing gas as a byproduct, of should producers actively seek gas in certain regions?
Prospects for LNG in United States Markets
- What is the fair market value of gas at each existing and prospective import terminal: Lake Charles, Elba Island, Cove Point, Everett, or Quebec?
- How much gas will be absorbed at each and over what period of time?
- When if ever will existing facilities operate at capacity?
- When if ever will incremental new capacity be profitable?
- What domestic source will be displaced by LNG at each import terminal?
- How important are issues such as regional and national demand growth, new technology, and other domestic considerations?
Prospects for LNG in Europe
- What is the fair market value of gas at each existing and prospective import point?
- How much gas will be absorbed at each?
- When if ever will existing facilities operate at capacity?
- When if ever will incremental new capacity be profitable?
- What source will be displaced by LNG at each European import terminal--Soviet gas, Algerian gas, domestic gas, Norwegian gas, United Kingdom gas?
- Does LNG from far away places such as Qatar, Nigeria, or Latin America really have a chance in Europe?
Prospects for LNG in Japan and Korea
- What is the fair market value of gas at each existing and prospective import point?
- How much gas will be absorbed at each?
- To what extent would gas imports compete with nuclear, electric, or other Japanese policy initiatives?
- When will present capacity be fully utilized?
- What profit margins will be realized on present capacity?
- When and where will new capacity be economic?
- Does LNG from far away places such as Qatar or Alaska really have a chance in Japan, or is Japan better off to buy from more contiguous locations such as Indonesia, Malaysia, or Australia?
Realistically Sustainable Government Policy
- What will be the true market consequences of various "government takes" such as lease bonus payments, percent of sales royalties, Btu taxes, production sharing arrangements, or transfer of property rights after some prespecified number of years?
- How much direct and/or opportunity cost is inherent in producer government subsidies and incentives?
- What magnitude of producer government subsidy is truly sustainable?
The WGTM extended the proven concepts underlying NARG to the entire world and answered the foregoing questions for the benefit of our sponsors and subsequent clients:
- Amoco
- Atlantic Richfield Company
- BP
- California Energy Commission
- Chevron
- Enron
- Exxon
- Fina
- Mobil
- Phillips
- Shell
- Texaco
Altos and our sponsors assembled WGTM using the regionality in the diagram, and we assembled and have since revised a complete, accompanying world gas data base.
WGTM Data:
The WGTM comes to you fully populated with data, which characterizes world supply,
transportation, and demand over the next thirty years and includes:
- Reserve, resource, and cost data for all existing and prospective future gas producing basins in the world. The model distinguishes over 160 individual gas producing basins worldwide and contains a price-quantity supply curve for each category of resource in each basin. We have entered a partnership with the United States Geological Survey (USGS) whereby they provide to Altos their ongoing world oil and gas data base, we insert it into MarketPoint™. They intend to use MarketPoint™ in part to distribute their data base. The USGS has the most comprehensive world gas data base available anywhere in the world. The supply curve for the West Australia producing basin from the model is depicted in the diagram. Altos provides similar curves for every increment of resource in every region of the world.
- Cost, tariff, and capacity data for all existing and prospective future pipeline and/or tanker routes in the world. This data has been assembled over the past several years using direct observation of tariffs and basis differentials, extrapolation of costs from the United States, Europe, and industrialized countries, and cognizant engineering analysis.
- Demand projections by market segment for all gas consuming regions in the world. Demand projections are made by the OECD for every country in the world, and we are able to aggregate them into the WGTM regions.
- Policy and tax data for critical producing, transportation, and consuming regions in the world. Tax data have been assembled during client assignments using their knowledge of the tax and fiscal regime in various countries.
Altos offers the WGTM in several ways:
(1.) We offer a software license that allows for ongoing, in-house, independent use by your staff, including all supply, transportation, and demand data.
(2.) We use WGTM 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 WGTM 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 WGTM model. WGTM is now implemented within MarketPointTM, a new proprietary software system that allows full graphical implementation of regionality and technology, full Excel emulation of inputs and outputs, and fully automated reporting of model results.
|
|
|
|
|
|
|
|
|
|
|
say
|
|
|
"I have enclosed for your information a copy of my report to EPRI on the examination of alternative methodologies for building combined energy models. Starting with a view favoring hierarchical systems as the most convenient organizing framework, I became, as you can see, a complete convert to the Brock-Cazalet-Nesbitt view of the world. It has been an education for me, and I thank you for it."
|
|
|
Prof. William Hogan
Harvard University, Director Kennedy School of Government
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Track Record of Success.
Winners like Altos have a demonstrable history of success and value creation, and the market knows about that track record; it is not necessary to hype it. Our track record of success dates back 25 years and has spanned
|
|
|
|
|
|
|
|
|
|
|
|
|
decisions
|
|
|
2000 Calpine Corporation hired Altos to provide the independent market analysis in support of what turned out to be their successful financings of their Lost Pines I combined cycle project and their Baytown combined cycle project. Those financings of those major Calpine assets were based in large measure on the Altos analysis and reports, which projected fundamental forward prices and spark spreads in the market using MarketPoint. Those independent market analysis reports showed that the price differences in the market would more than sustain the cash coverage ratios desired by the financing institutions and therefore that the plants could service all their debt.
|
|
|
|
|
|
|
|
