A Given The Available Capacity in The Network How Much
A Given The Available Capacity in The Network How Much
A Given The Available Capacity in The Network How Much
much
a. Given the available capacity in the network, how much gas can be shipped from Katy to
Leidy? From Katy to Joliet?
b. How much gas should Bruce offer to sell to Joliet and Leidy if he wants to maximize profits?
c. Is Bruce able to meet all the demand from both customers? If not, why not?
d. If Bruce wanted to try to pay more to obtain additional capacity on some of the pipelines,
which ones should he investigate and why?
Figure 5.46
The United States is the biggest consumer of natural gas, and the second largest natural gas
producer in the world. According to the U.S. Energy Information Administration (EIA), the United
States consumed 22.7 trillion cubic feet of natural gas in 2001. Stemming from phased
deregulation, the transportation and delivery of natural gas from wellheads has grown since the
1980s, and there are now more than 278,000 miles of gas pipeline nationwide. With more
electric power companies turning to natural gas as a cleaner-burning fuel, natural gas is
expected to grow even more quickly over the next 20 years.
To ensure an adequate supply of natural gas, gas storage facilities have been built in numerous
places along the pipeline. Energy companies can buy gas when prices are low and store it in
these facilities for use or sale at a later date. Because energy consumption is influenced greatly
by the weather (which is not entirely predictable), imbalances often arise in the supply and
demand for gas in different parts of the country. Gas traders constantly monitor these market
conditions and look for opportunities to sell gas from storage facilities when the price offered at
a certain location is high enough. This decision is complicated by the fact that it costs different
amounts of money to transport gas through different segments of the nationwide pipeline, and
the capacity available in different parts of the pipeline is constantly changing. Thus, when a
trader sees an opportunity to sell at a favorable price, he or she must quickly see how much
capacity is available in the network and create deals with individual pipeline operators for the
necessary capacity to move gas from storage to the buyer.
ANSWER
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