What does GPCM stand for?

GPCM stands for “Gas Pipeline Competition Model”. It was initially designed to forecast market shares among pipelines. Since then, GPCM has been expanded to include all sectors in the North American gas and LNG market. Hence, it is now an entire suite of products under the name GPCM® Gas Market Simulation Systems™.

What is the basic purpose of GPCM?

GPCM is a market simulation system which gives analysts powerful tools for designing scenarios and forecasting their implications on natural gas production, pipeline and storage utilization, deliveries to local markets and sectors, and prices at points throughout the North American gas market.  GPCM supports better analyses and better decisions for organizations which use it. GPCM has been designed to be both powerful and flexible, enabling users to incorporate their own assumptions and analyze short term and long-term trends at whatever level of detail desired.

Who uses GPCM?

Energy Consulting Firms Upstream E&P Companies Midstream Pipelines and Storage Owners and Operators Downstream Utilities, Independent Power Producers, and Industrials Government Agencies Investment, Trading, and Banking Firms

Who designed GPCM?

Dr. Robert Brooks, Founder and CEO of RBAC, Inc.  In 1975 Dr. Brooks received his Ph.D. from the Sloan School of Management at MIT for his original work in modeling the North American natural gas market.  Most of his career has been devoted to improving and expanding upon this seminal work.  In 1997 he developed GPCM for use by RDI of Boulder, Colorado, which assembled the first GPCM base case database.  The following year RBAC and RDI released GPCM and the GPCM base case for licensing by other firms in the industry.  RDI was later acquired by S & P Global Platts which continues to be a licensee of GPCM.  RBAC now provides the GPCM base case to its licensees, updated four times per year.

What exactly does GPCM do?

GPCM simulates historical and future natural gas industry activity. Historical simulations are used to help calibrate GPCM for use in forecasting future market conditions.  Output from a GPCM scenario simulation consists of forecasts of the following items: Production by distinct play throughout North America Prices at over 80 commonly traded market hubs as well as many non-traded locations Pipeline receipts from producers by zone (pipeline segment) Pipeline flows and utilization Transfers between pipelines at interconnects Injections into and withdrawals from storage Deliveries by pipelines to customers Gas supply available to each customer in each region Receipt and delivery price in each pipeline zone Pipeline capacity valuation for month-ahead capacity release markets GPCM can also be used to simulate a variety of scenarios relevant to the energy transition Growth in production of Renewable Natural Gas (RNG) in landfills and farms Implications on supply and demand balance and prices of adoption of carbon trading markets and/or taxes Potential and implications of mixing hydrogen with methane in natural gas pipelines

What is the periodicity of GPCM results?

The standard periodicity for a scenario is monthly.  Monthly results can also be aggregated and presented by season (winter/summer) and year.  Daily periodicity scenarios can be simulated using the GPCM Peak Daily Demand Analyzer.

Where does the database come from?

Constructing a database from scratch can be an extremely time-consuming project. Therefore, RBAC provides GPCM licensees with a standard database model of the North American natural gas industry. Based on work begun in 1997 in conjunction with RDI and improved continuously ever since, this model is kept up-to-date and delivered to GPCM licensees as part of their quarterly GPCM Base Case Database Update Service. Licensees have the freedom to modify the GPCM base case database model to fit the needs of their own projects and analyses.  They can extend the model to include other existing or hypothesized supply areas or markets, even other countries, new pipelines and storage facilities, and new demand centers such as large natural gas fired generators and industrial plants.

What kinds of data are contained in GPCM Base Case?

For each pipeline

• Firm and interruptible tariffs by zone (pipeline segment)
• Receipt, delivery and throughput capacity by zone Pipeline fuel use fraction by zone
• Interconnect capacities with other pipelines by zone
• Injection and withdrawal capacities and costs in storage facilities by zone
• Receipt capacities from suppliers by supply region and zone
• Delivery capacities to customers by demand region and zone

For each supply region

• Relationship between production and price in that region, e.g., a supply curve derived from gas index prices and historical well-level production, projected into the future using highly granular data from Rystad Energy and other sources.

For each customer in each region

• Relationship between demand and price in that region, e.g., demand curves derived from gas index prices, historical gas consumption by sector (residential, commercial, industrial, electric power, and compressed-gas vehicles) and statistically derived regressions.

For each storage area

• Storage injection and withdrawal capacities, costs, and connecting pipes.

What is the form of the output?

• There are over 20 flexible output reports.
• Each report can be tailored and then exported to an Excel Workbook.
• Output can be integrated with powerful visualization systems such as Microsoft’s PowerBI
• GPCM contains a powerful time series graphing capability for viewing trends and patterns of gas flows and prices.
• The GDS Graphical Display System consists of several tools:
  • A mapping tool for drawing pipelines against a map of North America
  • Schematic drawings for each pipeline for presenting results graphically
  • A map display of market point prices, basis, and spreads across North America.
  • A flow map for displaying pipeline flows from any given supply basin to each census region served by that supply basin.
  • A flow map for displaying the pipeline flows from each supply basin source to any given consuming census region.

What are the basic assumptions behind the simulations?

• GPCM is a pipeline specific network optimization model based upon the principles of market clearing economics subject to limited flow capacities.
• Competitive markets
• Prices rise or fall so as to clear markets (i.e. balance supply and demand)
• Gas will flow from production to consumption regions so as to minimize transportation and storage costs while clearing markets.
• The resulting set of flows constitutes an “economic equilibrium” or “market clearing” solution for the natural gas industry.

What kinds of “scenarios” (“what if’s”) are possible?

• “Base” scenario using existing pipeline tariffs, capacities, and “normal” weather for demand regions.
• “Severe winter” or “mild winter” demand cases
• New import/export pipelines between Canada, the US, and Mexico
• Pipeline capacity expansions and/or reversals
• Proposed pipeline projects for new or growing supply sources to markets
• Proposed LNG import/export terminals and capacity expansions
• Increases or decreases of production capacity in traditional areas
• Increase renewable natural gas production
• New storage fields or increases in existing storage capacity
• Increasing demand in the gas-fired generation sector Growing natural gas vehicle demand
• Demand impact of changes in economic outlook
• Impact of increasing carbon taxes or prices in a carbon trading market

What software do you need for GPCM?

• Operating system: Windows 10 64bit
• Office version: 64-bit Office 2016, 2019, or 365

What kind of computer do you need?

• Computer processor speed: Intel Core i7-7700K Quad core, 4.2GHz, or faster; Xeon processors with 10 cores at 3 GHz or faster.
• Note: for virtual machines, a minimum of 2 virtual processors are required, but 10 or more are recommended.
• Computer memory: min 16 gigabytes; 32 gigabytes+ recommended
• Computer hard drive: 512 GB or larger; SSD recommended.
• Note: Additional storage recommended for backing up prior studies’ databases.

What human resources do you need to operate the system?

• A GPCM product manager to identify situations to study, design cases to be run, and to evaluate results for potential investment decisions. A hands-on analyst who will set up scenarios, run them, extract results, and prepare presentations.

What kinds of skill sets are needed?

• Good facility with Excel. Experience with Access would be useful, but not required. Good math skills. Economics background. Good understanding of the natural gas industry. Likes to work with data and models.

What kind of training and support is available?

• On-site or virtual Basic GPCM Training Course for new licensees.
• Advanced Training and on-site consultations available on request.
• Telephone support available from 9:00 am through 5:00 pm Central Time.
• E-mail support also available.
• Annual GPCM User Conferences.

What other types of modeling tools are available from RBAC?

• GPCM^® Gas Market Simulation Systems™
  • GPCM^® Market Simulator for North American Gas and LNG™
  • GPCM^® Essentials
  • GPCM Viewpoints^®
  • GPCM^® Visual Analytics
• G2M2^® Global Gas Market Simulation Systems™
  • G2M2^® Market Simulator for Global Gas and LNG™
  • G2M2^® Essentials
  • G2M2^® Viewpoints™
  • G2M2^® Visual Analytics
• Gas4Power^® with RBAC’s Power Model Interface
• NGL-NA^® Market Simulator for North American Natural Gas Liquids
• Market Simulation Advisory Services
  • Custom Scenario Design & Analysis
  • Assistance in establishment of in-house market simulation capability

Who do I contact for more information about GPCM?