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Natural Gas Market Module - NEMS Documentation

May 1, 2020

Introduction

The Natural Gas Market Module (NGMM) is the component of the National Energy Modeling System (NEMS) that is used to represent the North American natural gas transmission and distribution system. The NEMS was developed by the U.S. Energy Information Administration (EIA) and is the third in a series of computer-based energy-economy modeling systems used since 1974 by EIA and its predecessor, the Federal Energy Administration, to analyze and project U.S. domestic markets. The NEMS was designed to provide 25-30 year projections and permit the analysis of a broad range of energy issues at both national and regional levels. While the NEMS was first used in 1992, the model is updated each year; updates in individual modules range from simple historical data updates to complete replacements of submodules. The NGMM is an entirely new model incorporated into the NEMS for the Annual Energy Outlook 2018, replacing the Natural Gas Transmission and Distribution Module (NGTDM).

Documentation purpose and scope

The purpose of this report is to provide a reference document for model analysts, users, and the public that defines the objectives of the Natural Gas Market Module (NGMM) in the NEMS. It is intended to fulfill the legal obligation of EIA to provide adequate documentation in support of its models under Public Law 93-275, Federal Energy Administration Act of 1974, Section 57(B)(1) (as amended by Public Law 94-385, Energy Conservation and Production Act).

The report describes NGMM’s basic design, provides detail on the methodology employed, and details the model inputs, outputs, and key assumptions. Since the NGMM was first incorporated into the NEMS for the Annual Energy Outlook 2018, the documentation also describes the decision to build a new model in the NEMS to represent natural gas markets and the differences between the NGMM and its predecessor.

In addition, this report also serves as a reference document for how the NGMM utilizes Advanced Integrated Multidimensional Modeling Software (AIMMS), as well as AIMMS best practices for use in the NEMS. The NGMM is the second module (after the Coal Market Module) developed and implemented in the NEMS using the AIMMS modeling language and user interface, and EIA expects to develop all future optimization models in AIMMS. Therefore, the documentation report uses AIMMS terminology to provide detailed descriptions of the most efficient, flexible, and transparent techniques and methods employed in the NGMM. This is particularly important for ensuring the reproducibility of results given the complexity of NEMS runs and the exchange of data between the NEMS Fortran code, the NGMM AIMMS code, and various external files.

Model summary

The NGMM models the transmission, distribution, and pricing of natural gas in the NEMS. The model code is written in AIMMS and is a quadratic program that maximizes consumer plus producer surplus minus transportation costs, subject to linear mass balance and capacity constraints. For all months in a year, the NGMM determines the production, flows, and prices of natural gas within a state-level representation of the U.S. pipeline network and a regional representation of the Canadian and Mexican pipeline network (Figure 1.1 ), connecting domestic and foreign supply regions with demand regions. End-use natural gas consumption by sector, storage, and liquefied natural gas (LNG) export terminals are all integrated into the network by demand region. The NGMM projects lease fuel, plant fuel, pipeline fuel, fuel used for liquefaction, LNG export capacity builds, and pipeline capacity expansions. Distributor tariffs are also projected to arrive at the delivered price of natural gas to domestic consumers. Since most other NEMS modules operate on an annual basis, NGMM results are generally passed to other NEMS modules as annual totals or quantity-weighted annual average prices.

Figure 1.1 NGMM natural gas pipeline network representation

Documentation organization

The document is intended to provide a framework for understanding how the natural gas market is represented in EIA’s long-term U.S. energy market projections. Subsequent chapters of this report provide:

  • Overview of natural gas market representation in the NEMS (Chapter 2)
  • NGMM model structure, design, and mathematical formulation (Chapter 3)• NGMM input data preoprocessing routines, including model initialization in the first year (Chapter 4)
  • NGMM output data post-processing routines and reporting to other NEMS modules (Chapter 5)
  • NGMM assumptions, inputs, and outputs (Chapter 6)

It includes a number of appendices to support the material presented in the main body of the report:

  • Appendix A: Model abstract
  • Appendix B: References
  • Appendix C: Table relating the variable names used in the documentation to the specific variable, or identifier, used in the model code
  • Appendix D: Table relating the equations presented in the documentation to the relevant procedure in the code
  • Appendix E: Table relating the input data parameters in the model code and the data input files from which they are read and where detailed descriptions of the input data, including variable names, definitions, sources, units and derivations can be found
  • Appendix F: Table that Identifies all global data passed between other NEMS modules and the NGMM, as well as a brief description of the variable and the related module, where applicable
  • Appendix G: Documents the derivation of all empirical estimations used in the NGMM

Model archival citation

This documentation refers to the NEMS Natural Gas Market Module as archived for the Annual Energy Outlook 2020 (AEO2020). The model contact is

Kathryn (Katie) Dyl
Energy Information Administration
U.S. Department of Energy
1000 Independence Avenue, SW
Washington, D.C. 20585
(202) 287-5862

See full report