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Just in Time: EDI for Gas Nominations

Fortnightly Magazine - February 1 1996

of you do as well, you will be automatically confirmed to flow gas.

If pipelines become concerned about the automatic nature of the deals, the industry could start off by allowing automatic flows only for firm and secondary firm agreements. This way, the capacity would almost always be there; when it isn't, the mismatch could be handled with predetermined allocations (PDAs) and operational balancing agreements (OBAs) for the first such day of flow, and the pipeline could announce that only primary firm transactions would be assured capacity on the following day.

Make All Nominations Cumulative and Incremental

Every nomination should be additive for the day it concerns, whether it was sent by fax, EBB, or EDI. Unless specifically canceled or revised using the appropriate field in the nomination data set, every nomination is incremental to its predecessor. Make all nominations cumulative and incremental. Any other formulation will bring chaos and frustration to both shipper and pipeline, as shown by the following nightmare scenario:

Assume that two nominations arrive from the shipper. One arrives at 10:00 a.m.; the other one minute earlier, at 9:59. The 10:00 a.m. document is indexed with a "document counter" that assigns a serial number that precedes the number assigned to the 9:59 nomination. Which do I honor? Which trumps? The earlier in time, or the earlier according to serial number? Without a rule making all nominations cumulative and incremental, priority becomes ambiguous.

Instead, all nominations should be considered as individual requests for service unless one nomination specifically cancels a previous nomination. In that case, the revised nomination would replace the initial nomination in the whole. Such a convention would resolve ambiguity as to whether a given nomination means "no change in earlier nominations" or "cancel all flows."

Balance Firm Volumes

with "Take and Replace"

We have a crazy system for nominating gas: Guess today what you might need tomorrow. Then buy and schedule those volumes, nominate the gas on the pipeline, and confirm the flows upstream and downstream with precision down to the exact Decatherm (Dth). If everything fails to match, it doesn't go. Or, 16 hours later, when the gas does flow, prepare for the next 24 hours to scramble like crazy to perform midday nominations to stay in balance. And even then, no matter what, you will be wrong. The nomination never balances to the flow. Why? Because none of us is any good at predicting the future. The present system only works if you have one of those late-night psychic friends in your shop.

Why not install a system of take and replace for firm shippers?

Take and replace would operate under the assumption that firm shippers reserve in the line a given volume of gas as a "security deposit," equal to as much as three days of gas at full contract quantity. Then, any time a shipper wants to initiate flows and take under a contract, it begins to flow the gas at the start (e.g., 8 a.m. Monday, at full contract) of the pipeline's receipt gas day zero (8 a.m. Monday to 8