AN OPTIMIZATION MODEL FOR PLANNING NATURAL-GAS PURCHASES, TRANSPORTATION, STORAGE AND DELIVERABILITY

Natural gas local distribution companies (LDCs) face the problem of ma naging natural gas purchases under conditions of uncertain demand and frequent price change. In this paper, we present a stochastic optimiza tion model to solve this problem. Unlike other models, this model expl icitly considers deliverability, the rate at which gas can be added to and withdrawn from a storage facility, as a variable, and considers i ts role in ensuring a secure supply of gas. Deliverability is often ov erlooked in gas supply planning, yet is a critical factor in achieving a secure gas supply. Using data from an LDC in Huntsville, Alabama, w e show how this model can be used to minimize total cost while meeting constraints regarding the security of gas supply. We also demonstrate that security is dependent on the rate of deliverability, which in tu rn is affected by a number of factors including gas availability, stor age and transportation considerations, and weather conditions. Copyrig ht (C) 1996 Elsevier Science Ltd