A Transco Case Study

1952 words - 8 pages

A Transco case study
Introduction
Gas is the carefully controlled source of nearly half of the country’s energy needs. And most of that gas is transported safely and reliably by a British company - Transco. All day, every day, sophisticated computer-based telemetry watches, records and reports as the gas goes through meters, compressors, valves and governors on its way to more than 20 million homes, factories and businesses. Millions of cubic metres of gas every day are pushed through the system at a steady 10-15 miles an hour.
Transco is the gas transportation arm of BG plc. The top management team comprises a managing director, chief operating officer, finance director, corporate ...view middle of the document...

Demand forecasts are made four times a day, but more may be made if the weather forecast or demand changes significantly.

Safety and security of supply have top priority. Transco monitors the system to maintain a physical balance, making sure that gas is available at the right place at the right time. Thousands of computer simulations are run each year to ensure optimum operation of the network under all operating conditions, including planned maintenance and special operations. It’s not only ensuring security of supply that’s a crucial element of Transco’s business. Making sure that all its operations are carried out safely is vital, too. As part of Transco’s commitment to safety, it operates the national 24-hour freephone gas emergency service.
Calls to the helpline are dealt with by trained operators at one of three national centres at Hinckley, Killingworth and Gloucester. Operators can give safety advice and, if the situation warrants it, despatch an engineer to make safe any escaping gas. An engineer has to attend within one hour if the leak is uncontrolled, two hours if controlled. It is estimated that in 1999, the service will receive around five million calls and of these, approximately half will be of an emergency nature.
Source
The gas starts its journey deep beneath the North Sea and is pumped ashore on the mainland of Great Britain at one of the seven terminals - St Fergus (Scotland), Bacton (Norfolk), Barrow (Cumbria), Easington (Yorkshire), Theddlethorpe (Lincolnshire), Burton Point (North Wales), and Teesside. From the terminals, it enters the National Transmission System and eventually arrives at the customer’s meter.
The Bacton-Zeebrugge interconnector links Great Britain with Europe, so during periods when the gas flows into the country rather than out, it is in theory possible that a gas consumer in Scotland could burn gas which started its journey in the Urals. Two other interconnectors supply gas from the mainland to Northern Ireland and the Irish Republic.
Nationalisation to regulation
In the past the gas industry was owned by Government, within the public sector. In 1986, gas became the first energy source in Great Britain to be regulated, three weeks after the then British Gas was privatised, with the issue of shares on the London Stock Exchange taking it into the private sector.
Even though gas is in the private sector, it is still heavily regulated. Transco is the country’s near-monopoly gas transporter and the largest of around ten public gas transporters licensed by the regulator, OFGEM (the Office of Gas and Electricity Markets) to move gas around the country. Transco’s pipeline business, because it is a monopoly, is regulated by OFGEM whose staff ensure that Transco works within the requirements of the Gas Acts and its license conditions.

Pricing and competition
Transco’s revenues are earned within a price control linked to the rate of inflation and modified by an efficiency factor decided by the...

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