1. NATURAL GAS ADAPTIVE SCHEDULING Peak Energy Solutions, Inc. Phone: (719) 265-6621 Email: stevehoyle@peakenergysolutions.comstevehoyle@peakenergysolutions.com Support Email: support@PeakEnergySolutions.comsupport@PeakEnergySolutions.com for APA Group Perth, WA Peak Energy Solutions, Inc.

2. 2 Overview Introduction to Peak Energy Solutions, Inc. What is N atural G as A daptive S cheduling ( NGAS )? NGAS Implementation for Gas Clients

3. Peak Energy Solutions, Inc. 3 Highlights Provides fast-running, customized, gas scheduling software Years of experience in natural gas scheduling and process optimization Familiar with NAESB and a wide variety of pipeline business rules

4. Peak Energy Solutions, Inc. 4 Current NGAS Customers El Paso (and Mojave) since 1994 Northwest Pipelines since 1996 Kern River Gas Transmission since 2000 Texas Gas (Boardwalk Pipelines) since 2004

5. Peak Energy Solutions, Inc. 5 Principal Associates Steve Hoyle, Ph.D. Stanford University, Mathematical Programming First use of AMPL/CPLEX in natural gas scheduling in 1994 Alan Magner, Bachelor of Business Studies in Economics & Accounting, University of Limerick 20+ years in Lean Six Sigma process improvement Deb Parker, M.S. Stanford University, Operations Research Experience in natural gas scheduling since 1997 Steve Dziuban, Ph.D. Rensselaer Polytechnic Institute, Operations Research and Statistics Experience in natural gas scheduling since 1997 Linda Tully, M.S. University of Colorado, Computer Science Experience in natural gas scheduling since 2004

6. Peak Energy Solutions, Inc. 6 Physical View Capacity limits at receipt, throughput, and delivery locations are enforced. Ownership View Gas ownership transitions from upstream supplier, through pipeline (including pools), and to the downstream market. Total gas flow is determined by supply/ demand in accordance with tariffs, laws, regulations, and agreements. Natural Gas Distribution Environments Rec Throughput Del Markets Pool Suppliers

7. Peak Energy Solutions, Inc. 7 What is NGAS ? N atural G as A daptive S cheduling A scheduling engine that interfaces with your system to provide optimal scheduling solutions Uses state-of-the-art optimization methods Implemented with powerful AMPL/CPLEX linear programming software -- essential for large, complicated pipelines Runs on PC or UNIX platforms Most effective when used to perform all scheduling adjustments (cuts)

8. Peak Energy Solutions, Inc. 8 Advantages of Using NGAS Outperforms industry running times: typical run times of 2 to 5 minutes Cost effective -- full-time AMPL/CPLEX developers not needed Higher pipeline throughput via unique “reinstatement” optimization step Displacement handled automatically Most business rules are data-driven (such as Priority of Service for capacity cuts; and number and length of cycles) Gas clients own customized code

9. Peak Energy Solutions, Inc. 9 Traditional Scheduling “Double cuts” decrease throughput –Always occur when sequential cuts are made –Result from physical and ownership cuts Ineffective use of displacement gas decreases throughput NGAS Increases Throughput Automatically uses displacement gas Detects slack in schedule created by earlier cuts Uses this slack to reinstate gas on double-cut noms/contracts without violating any constraints

10. Peak Energy Solutions, Inc. 10 SEQUENTIAL APPROACH ABCD 1.Pool Balance: Cut A to 1101109012080 2.Operator: D is above limit by 10 so cut1009012070 it to 70 then also cut A by 10 more 3.Capacity: B is over by 20 so cut to 70 and,1007010070 since D is firm, cut C by 20 ADDITIONAL NGAS STEP 4.By considering all constraints simultaneously, 120 7012070 NGAS recognizes ‘slack’ created by double cuts and reinstates 20 to noms A and C NGAS Avoids “Double Cuts” nom 90 B (rank 1) nom 150 nom 120 nom 80 Pool A (rank 2)C (IT) D (firm) RULES - Pool Balance: Flow in equals flow out - Operator: Physical or contractual - Capacity: Physical limitation 170 Throughput 190 Throughput NGAS Results Traditional Results

11. Peak Energy Solutions, Inc. 11 APA WA and NGAS working together How would improved transmission throughput benefit APA in WA? As client volumes and infrastructure are changing, is the APA transmission optimized ? Does APA in WA have optimized shipping in its network? Can gas shipments be scheduled between disconnected pipelines?

12. Peak Energy Solutions, Inc. 12 APA Group and NGAS working together Fast data I/O Are the requirements for APA on the east coast different from WA?

13. Peak Energy Solutions, Inc. 13 Gas Client System and NGAS work together Fast data I/O Friendly customer interface Well suited to accounting Database/GUI “Piece” NGAS “Piece” Fast data I/O Friendly customer interface Well suited to accounting Fast running algorithms Optimal, accurate scheduling Maximize throughput

14. Peak Energy Solutions, Inc. 14 Implementation Highlights Several initial pool balancing and rebalancing methods available Modularity facilitates maintenance, such as changing the cut order Capacity techniques make verification and explanation of cuts much easier Previously scheduled amounts protected at contract level or at nomination level, or can be cut Implements complex, customized segmentation rules

15. Peak Energy Solutions, Inc. 15 NGAS and Gas Client System Integration Gas Client System Gathers and stores information (contract data, nominations, etc.) Provides input data to NGAS using flat files or ODBC NGAS sequentially determines and labels cuts with accurate reason codes Cuts are passed to database via NGAS flat files or ODBC Reinstatement “cuts” are labeled as such NGAS provides outputs (by nomination, contract, point, etc.) Gas Client System uploads output files Updates database tables Prepares outputs and reports for display to end-users

16. Peak Energy Solutions, Inc. 16 Notional Implementation Sequence for Gas Client Develop software requirements Describe database interface Build NGAS model Run test sets for verification of results Train Gas Client personnel as needed 24/7 support agreement available

17. Peak Energy Solutions, Inc. 17 Requirements Considerations Contract or market carriage (combination?) Priority of Service (firm forward haulage vs. Interruptible haulage; pro-rata rules) System Use Gas by contract or nomination Pool structure and balancing rules Tiebreaking Rules (Ranks, Dates, etc.) Force Majeure and Assignment rules Park Services (physical, contractual, seasonal) Physical pipeline model (grid vs. soda straw)

18. Peak Energy Solutions, Inc. 18 Requirements Considerations Capacity cuts (Physical limits at receipt, delivery, throughput, net, bi-directional; hourly vs. daily) Non-Capacity Cuts (Operator balancing, contract limits, Park/Lend) Imbalances Data Input/Output Reports (cuts, contract amounts, point flows) Run times needed Anticipated development timeline (SRS, data, test, implement, support)