1. Gas Transmission Access: Curtailment
21 September 2017
First Gas / Presentation

2. Agenda
Preliminary:
Confirm what the GTAC says about “curtailment” (e.g. section 9)
Clarify First Gas’ views in relation to gas producer-gas buyer relations
Achieve common understanding of what the GTAC currently says about Mismatch (arising from gas production outages or otherwise)
Agenda:
Seek participants’ views on the need for NQ curtailment rights
Consider the implications of NQ curtailments
Confirm the role of OFO’s
Example – Receipt Point (OBA) outage and possible implications for producer and Shippers
Discuss potential GTAC amendments to provide NQ curtailment rights

3. Revised engagement approach for draft GTAC
Release of revised draft GTAC (11 September)
Focused sessions on selected topics (21 & 28 September)
Submission of GTAC to GIC for review (8 December)
Complete GTAC draft released for consultation and negotiation (10 August)
GIC complete review (by 23 March)
Workshop on revised draft GTAC (15 September)
Release of second revised draft GTAC (3 November)
GIC releases Preliminary Assessment (22 December)
2-day workshop (24-25 August)
Submissions on GIC Preliminary Assessment due (23 February)
Final mark-ups on second revised draft GTAC due (24 November)
Initial run through session (17 August)
Telecon Q&A session (31 August)
Stakeholder mark-ups and submissions on revised draft GTAC due (9 October)
Aug 2017
Sept 2017
Oct 2017
Nov 2017
Dec 2017
Jan 2018
Feb 2018
Mar 2018
Ensure provisions of GTAC are well-understood before inviting mark-ups
Enable further revisions to be made to better achieve intent and eliminate ambiguities
Allow stakeholders to propose improvements and highlight any remaining concerns
Allow time for First Gas to review proposed changes and submissions
Allow stakeholders to review changes made following first round of mark-ups and obtain legal review/mark-ups
Allow time for First Gas to finalise the GTAC before submitting to GIC
Allow stakeholders further opportunity to address any unresolved issues (including issues raised by other parties prior to submission of final GTAC)
* See GIC paper “Proposed approach to GTAC assessment” for further details on this stage

4. Curtailment – Current GTAC Provisions & Principles
Section 1.2 of the GTAC states that “curtail” includes “to reduce either partly or to zero and to shut or close down”.
GTAC curtailment applies to both nominations and flows
e.g. First Gas may curtail:
NQs at a Delivery Point > Available Operational Capacity
NQs at a Receipt Point when NQs > Maximum Design Flow Rate
Actual flow in the circumstances referred to in section 9.1
Section 9 is currently focused on responding to events that have damaged or affected, or may damage or affect the physical ability of the Transmission System (or part of it) to receive and/or deliver gas.
MPOC “Curtailment” is where either the TSO (s15.1) or an Interconnected Party (s15.2) reduces SQs and NQs at both the Receipt and corresponding Delivery Points (as MPOC nominations are daisy-chained).

5. Curtailment - Current GTAC Provisions & Principles (2)
First Gas won’t become involved in the gas sale and purchase arrangements of gas producers and Shippers
First Gas believes that including an equivalent to section 15.2 of the MPOC in the GTAC would be inappropriate
OBAs are one choice for gas producers: they are not compulsory
Not “daisy-chaining” nominations (now gas/capacity, not gas/gas) is deliberate
Gas producers and Shippers have means under the GTAC, e.g. ID Cycles (including proposed Emergency Cycle) and gas trading, to manage their Mismatches
Circumstances for First Gas to reduce NQs in the GTAC are currently limited. However, some of the scenario analysis in this presentation show that there may be scope for an increased ability for First Gas to initiate a curtailment of NQs / SQs at either Receipt Points and Delivery Points depending on the circumstances

6. OFO’s – Another Form of “Curtailment”
OFO’s may be used to curtail flow in the circumstances where an “adverse event” such as those listed in section 9.1(a) of the GTAC or template ICA’s has occurred and a physical response is required to “curtail” flow
OFO’s can be issued to Shippers or Interconnected Parties
First Gas will issue an OFO to the Interconnected Party at a Receipt Point or Dedicated Delivery Point, and not to the Shipper(s) using that point (new section 9.5 GTAC)
There are potentially significant consequences for failing to comply with an OFO:
First Gas may curtail the injection and/or take of Gas itself; and
the Shipper and/or Interconnected Party indemnify First Gas for any Loss incurred by First Gas for failing to comply: GTAC liability caps will not apply
OFO’s will be published on the new IT system
OFO’s cannot make a party inject or increase offtake

7. GTAC Curtailment Example:
Production Station (OBA) Outage – Falling Line Pack / Pressure
Receipt Point (with OBA) experiences significant outage.
First Gas received notification of outage (wider notification to industry?)
No flow at Receipt Point anticipated for rest of day.
Outage occurs shortly after commencement of ID2 Nominations Cycle
Receipt Point supplies Shippers with a diverse range of customers ranging from large direct connected parties to smaller commercial and domestic users.

8. GTAC Curtailment Example:
Production Station (OBA) Outage – Falling Line Pack / Pressure
Time
Event
Scenario 1
Scenario 2
11:00
I2 starts -
11:01
Production Station (OBA) Trips
Incentives for Shipper and Producer to reduce Noms.
14:00
I3 Nominations, Confirmations, Approvals
Shipper » Noms I3 = I2
Producer » accepts
Producer » rejects by reducing it to deemed Qty
15:00
I3 starts
Incentives
Producer » to fix issue
Shipper » none
Shipper » to reduce Noms and offtake; or source gas somewhere else
Charges/Fees
Producer » Negative RM
Producer » Negative RM to a lesser amount
Shipper » Negative RM

9. GTAC Curtailment Example:
Production Station (OBA) Outage – Falling Line Pack / Pressure
Time
Event
Scenario 3
Scenario 4
11:00
I2 starts -
11:01
Production Station (OBA) Trips
Incentives for Shipper and Producer to reduce Noms.
14:00
I3 Nominations, Confirmations, Approvals
Shipper » Noms I3 < I2 (reduction)
Producer » accepts
Producer » rejects by increasing it to previously approved Qty (I3 = I2)
15:00
I3 starts
Incentives
Producer » to fix issue
Shipper » none
Shipper » to reduce Noms or increase offtake;
Charges/Fees
Producer » Negative RM to a lesser amount
Shipper » Positive RM and Underrun Charges

10. Previous GTAC Curtailment Example: Four Nomination Scenarios
There are four ways nominations can change at the Receipt Point in response to the outage and there are two demand permutations:
Shippers nominate at ID3 for the same gas as ID2
Producer accepts
There is demand response to the outage
There is no demand response
Producer rejects nomination and reduces nominations to deemed flow
Shippers nominate at ID3 for reduced quantities (demand response)
Producer rejects reduction and nominations are kept the same as ID2

11. GTAC Curtailment Example: 1ai & 2ai
Four Nomination Scenarios
Producer nominations have been kept the same and there is a demand response
Running Mismatch
Producer Negative Running Mismatch increases
Shipper Positive Running Mismatch increases
To alleviate the resulting Running Mismatch the parties trade

12. GTAC Curtailment Example: 1aii & 2aii
Four Nomination Scenarios
Nominations remain the same and there is no demand response
Running Mismatch
Producer Negative Running Mismatch increases
Shipper Running Mismatch remains the same
Producer has two ways to alleviate the Running Mismatch
Purchase from another producer
Purchase a demand response from another Shipper or Delivery OBA party
The other party effectively increases their positive Running Mismatch which is then purchased by the Producer
If alternative supply/demand response cannot be obtained by the Producer and/or Shippers then First Gas will explore trading as well and/or look to curtail demand

13. GTAC Curtailment Example: 1bi & 2bi
Four Nomination Scenarios
Producer reduces nominations to deemed flow in ID3 and demand is reduced
Running Mismatch
Producer Negative Running Mismatch increases (less than before)
Shipper Positive Running Mismatch increases (less than before)
To alleviate the resulting Running Mismatch the parties trade

14. GTAC Curtailment Example: 1bii & 2bii
Four Nomination Scenarios
Producer reduces nominations to deemed flow in ID3 and there is no demand response
Running Mismatch
Producer Negative Running Mismatch increases (less than before)
Shipper Negative Running Mismatch increases
Producer has the same options as 1a to reduce their (lesser) exposure to Running Mismatch
Shipper has three ways to alleviate the Running Mismatch
Purchase from another producer
Purchase a demand response from another Shipper or Delivery OBA party
Reduce demand from its end users (if possible)
Again, if alternative supply/demand response cannot be obtained by the Producer and/or Shippers then First Gas will explore trading and/or look to curtail demand

15. GTAC Potential Amendments
s4.20 says that any reduced NQ will be automatically accepted: must the gas producer agree to that?
If a gas producer has the right to reduce NQs “intra-ID”, do Shippers need the same right to reduce Delivery NQs?
Consumers should not be affected unnecessarily: line pack/Mismatch, park and loan should be utilised
First Gas will know which Shippers are affected by a producer outage
The producer should advise the outage duration and ΔGJ
First Gas will try to buy Balancing Gas for ≤ ΔGJ if line pack becomes too depleted: that gas may not be obtainable
Consumers may then need to be curtailed: Shippers could set up a curtailment order, otherwise First Gas would curtail pro-rata

16. GTAC Potential Amendments (2)
What happens when demand is < supply?
First Gas will attempt to move gas around the system (“store more”)
Line pack increases and TTP may rise > 48 bar g
First Gas will try to sell Balancing Gas, but there may be no buyer
Curtailment of gas injections into the system may ultimately be required
First Gas can not discriminate against any producer
We could quantity the reduction in line pack required and curtail all producers pro rata
This would be a last resort: producers and Shippers who might not be in Mismatch would be affected too

17. Curtailment – Emergency ID Cycle
A proposed “Emergency ID Cycle” is designed to provide flexibility to respond to changing circumstances (particularly after last ID cycle)
It would be another tool to help gas producers and Shippers manage their Mismatch positions.
Section 4.25 GTAC currently states, “If practicable, First Gas will provide a fifth Intra-Day Cycle, in addition to and after the four referred to in section 4.14, to be used where a Shipper experiences an unforeseeable change in either its receipts of Gas or its customers’ demand for Gas.
To manage unexpected production station outages, “intra-ID” changes to NQ may be required (Emergency ID cycle ≠ “Intra-ID” Cycle).
Will need to be workable from a new IT system perspective.
Preliminary industry feedback is to remove the reference to “fifth” ID Cycle and possibly make it more than a singular cycle.
We would welcome further feedback on the potential role and application of an Emergency ID Cycle (or cycles).