Short term gas demand forecasting is a key business process within the regulated transportation sector of the UK gas market. It is essential to manage integrated gas networks efficiently to minimize gas trading and transportation costs. This paper describes how gas demand is forecast for the UK network on a dayby-day basis. The issues affecting forecasting are discussed in some detail, including available weather information, differences in the way the domestic users of gas operate their heating systems within the home, day of week effects, seasonality and data quality issues. A number of methods to forecast gas demand over a 72 hour period are described including techniques such as Fuzzy Logic, Neural Networks and standard statistical methods. The accuracy and factors affecting the performance of these models are also described together with what steps can be taken to improve the final forecasts. As the gas supply market in the UK becomes de-regulated, the affects of energy trading (trading in gas, electricity and oil) on gas demand will also be discussed. Short Term Gas Demand Forecasting

1. Introduction

Demand forecasting is a key process in the running of the UK gas network. An accurate forecast is required to enable system balancing thus ensuring a safe and secure supply at minimum cost. Over a number of years, a range of forecasting tools have been developed and research is ongoing to meet the need for ever more accurate forecasts. This paper describes the techniques used to forecast short-term gas demand. First, an overview of the UK gas network is given and an introduction to the forecasting process. Then a more detailed description is given of the individual forecasting methods employed and how these are combined to derive a single optimum forecast. Finally, some idea of the future forecasting needs will be discussed given the changing nature of the gas and energy markets in the UK and Europe.

2. General Overview 2.1 The BG Group

Prior to 1986, the UK gas market consisted of a government owned utility, British Gas. In 1986 British Gas was privatized as a monopoly transporter and supplier of gas. Since then, the gas market has undergone major changes. Increasing competition, initially in the large industrial market but now across the board together with changes in the regulatory regime prompted the company to separate its two primary businesses. The gas supply part of the business became a separate company called Centrica, whilst the rest of the business became BG Group plc. BG Group includes Transco, BG Storage, BG International Exploration and Production, BG International Downstream and BG Technology. Transco is the part of the BG Group who own and operate the gas transportation network and is responsible for its integrity and safe operation. BG Technology provides research and consultancy services to Transco, other parts of the BG group and increasingly to external customers.

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