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A dynamic model of global natural gas supply

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Title: A dynamic model of global natural gas supply
Authors: Crow, DJG
Giarola, S
Hawkes, AD
Item Type: Journal Article
Abstract: This paper presents the Dynamic Upstream Gas Model (DYNAAMO); a new, global, bottom-up model of natural gas supply. In contrast to most “static” supply-side models, which bracket resources by average cost, DYNAAMO creates a range of dynamic outputs by simulating investment and operating decisions in the upstream gas industry triggered in response to investors’ expectations of future gas prices. Industrial data from thousands of gas fields is analysed and used to build production and expenditure profiles which drive the economics of supply at field level. Using these profiles, a novel methodology for estimating supply curves is developed which incorporates the size, age and operating environment of gas fields, and treats explicitly the fiscal, abandonment, exploration and emissions costs of production. The model is validated using the US shale gas boom in the 2000s as a historic case study. It is found that the modelled market share of supply by field environment replicates the observed trend during the period 2000–2010, and that the model price response during the same period – due to lower capacity margins and the financing of new projects – is consistent with market behaviour.
Issue Date: 18-Mar-2018
Date of Acceptance: 28-Feb-2018
URI: http://hdl.handle.net/10044/1/58529
DOI: https://dx.doi.org/10.1016/j.apenergy.2018.02.182
ISSN: 0306-2619
Publisher: Elsevier
Start Page: 452
End Page: 469
Journal / Book Title: Applied Energy
Volume: 218
Copyright Statement: © 2018 Elsevier Ltd. All rights reserved. This manuscript is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License http://creativecommons.org/licenses/by-nc-nd/4.0/
Sponsor/Funder: Natural Environment Research Council (NERC)
Funder's Grant Number: NE/N018656/1
Keywords: 09 Engineering
14 Economics
Energy
Publication Status: Accepted
Appears in Collections:Faculty of Engineering
Earth Science and Engineering
Chemical Engineering



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