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DWG Call. J. Austin Tuesday, July 19, 2011. Natural Gas Price Differentials. Been asked, why doesn’t TEPPC use an established forecasting service, e.g., PIRA, CERA, etc?

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dwg call

DWG Call

J. Austin

Tuesday, July 19, 2011

natural gas price differentials
Natural Gas Price Differentials

Been asked, why doesn’t TEPPC use an established forecasting service, e.g., PIRA, CERA, etc?

The Issue has to do with the Perception that the Council’s methodology just uses historic data. If so, how do you capture the new development that are lowering gas prices? New paradigm shifts (e.g., shale gas development)?

the council s approach
The Council’s Approach

I posed the question to Terry Morlan, owner of the econometric equation, using historic data, that is used by the Council to generate gas prices at sub-regional hubs. Terry makes three points as follow:

  • The econometric equation has a “dummy variable” that cover for excursions and it should also cover to maintain basin relationships
  • Terry acknowledged “Shale Gas” has the potential to change differentials, especially in the east with relation to HH and in BC, but did not think that would be as evident in the west.
  • Terry stated, there is no sure way to predict the impact of “Share Gas” into the future; especially, when historical relationships has been very stable.
other approaches
Other Approaches

The CEC has used the North American model in the past; Angela has stated that they’re working on a new methodology – will it be available?

PIRA and CERA uses models that idealize – maximize – minimize but do not necessary provide better results

There is the issue of committing to making all TEPPC data open, transparentand fully accessible