Optimum gas delivery contracts are those which maximize gas production whilst minimizing penalties caused by insufficient well capacity to meet contracted demand. The method of stochastic simulation is described for predicting seasonal and daily gas demand together with techniques derived from the boundary element method for the modelling of reservoir deliverability performance. These two methodologies are combined to give a robust procedure for the nomination of contractual gas delivery quantities.
This paper is principally concerned with the nomination of contract gas quantities in the context of the UK sector of the North Sea. In the UK it is the responsibility of the British Gas Corporation (BGC) to maintain supplies to both domestic and industrial consumers. This obligation is passed to the gas producers through binding average and peak gas deliverability contracts. with penalties for failure to meet contracted deliverability targets.
The Annual Contract Quantity (ACQ) is the total cumulative amount of gas supplied to BGC during a contract year. which usually starts at the beginning of winter (October) to the end of the next summer. The Daily Contract Quantity (DCQ) is the equivalent (average) daily rate. In general, BGC specifies both a (normalized) average rate profile for the year. which may be given by a winter-summer production ratio. and a load factor profile which specifies the ratio of requested field deliverability to DCQ at any particular time. The product of the load factor and Daily Contract Quantity at any given time defines the Seller's Delivery Capacity (SDC):
The objective of the gas field operator is to nominate the highest possible ACQ (equivalently, highest possible SDC) subject to a specified average rate profile and a specified load factor profile. For example, the average rate profile is often specified simply as winter-summer ratio, say 2.7, and a winter load factor of 1.67 with summer load factor of 1.3. These profiles are shown in Figure 1a. A profile with monthly variation in average rate is shown in Figure 1b.
Normally, deliverability (or SDC) must be maintained for a minimum contract period (up to 55 days. or unlimited). In practice, producers are seldom required to produce at maximum deliverability for longer than two weeks. Penalties can be severe with shortfalls either being paid for through reduced gas price, deducted from subsequent years (that is, gas taken but not paid for), or a combination of these.