Abstract
We describe the elements and actors in the global natural gas value chains with an emphasis on characteristics relevant for large-scale energy system and market modeling. We give backgrounds on natural gas as a hydrocarbon to provide a rationale and understanding for what functional representations in mathematical programming models aim to represent. Simply taking the most advanced and detailed functional forms for all value chain characteristics and activities will typically result in numerical intractability. One should carefully determine what is needed to address a research question or analyze a business case. Recent advances in mathematical programming do allow solving large models with adequate detail for many types of analysis. We discuss which functional forms and modeling approaches can be appropriate for representing various characteristics in different types of analysis and provide a succinct and general mathematical programming formulation reflecting the optimization problems for different types of actors in the value chain. We provide an implementation for a stylized network using GAMS.
Highlights
Natural gas consumption and production can be found in all world regions
Larger volumes of liquefied natural gas (LNG) spot trade are causing regional natural gas markets to gradually merge into a global market
This paper provides engineering, economic, and policy considerations and discusses a middle ground techno-economic perspective accounting for enough engineering and market detail, considering advantages and disadvantages of different functional forms and modeling approaches
Summary
Natural gas consumption and production can be found in all world regions. There are big differences between the regions regarding the maturity of the markets and the types of applications that use natural gas. Gases 2021, 1 options, notably Japan and South Korea For several reasons, such as locally depleting reserves and supply security considerations, long-distance international gas trade has increased rapidly since the change of the century. Larger volumes of LNG spot trade are causing regional natural gas markets to gradually merge into a global market. This globalizing natural gas market requires an extension of the traditional modeling tools that consider regional pipeline networks mostly. In large systems and for instance climate policy or other long-term analyses, the emphasis in the model development is on the economic aspects and interactions prevalent in the natural gas market. Before introducing the economic roles of natural gas market actors, we start by introducing natural gas as a fossil fuel subject to production, transport, storage, trade, and consumption
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