CGC's New System And Planning Capability Analysis

Citizen Gas Company Overview

Question:

Write an essay on Citizen Gas Company.

Citizen Gas Company, the natural gas provider has three types of consumers: Residential, Commercial and Industrial. There is a huge weather dependency in order to usage of gas in case of the residential revenue. On the other hand, the gas usage of commercial consumers is partly weather dependent whereas consumers of industrial usage is governed by factors of business comprehensively. In the current consumer demand of supply, the company has been planning to establish long term contracts with ten pipeline existing companies and provide supply during the gas year, however, the company figured out problems in CGC’s planning efforts. To correct this problem, the company has appointed a new director of corporate planning. To solving the problems of lost sales and oversupply at the gas end, the director has presented a new conceptual design. In this report, the researcher will analyze the structure and features of the new system of CGC and further incorporate adequate planning capability.

Natural gas is a versatile clean burning and efficient fuel that is used in a variety of application (Holade et al. 2015). Due to having a huge demand of the natural gas provider, CGC is currently operating with ten pipeline companies in the “amount specified in contracts” however, the company needs to be specified “gas volume contract” w1ith the pipelines companies. Under the previous gas supplying system, all contractual agreements with the pipelines companies were short terms and others maintained the take-or-pay clauses. Although the pipelines are efficient means of transporting natural gas ensuring speed, safety and smoothness (Khadem and Boozarjomehry 2015). However the company falls short to achieve the demand of consumers during the gas end period. Here in this context, the company changed their existing gas transportation system and implemented a new conceptual diagram to overcome the indentified problems.

Criteria to be considered in specifying the structure:

There are many factors considered before developing a new system:

Firstly, there were many contracts where supply over the contract amount was not specified. Furthermore, many pipelines companies were transporting natural gasses containing take-or-pay clauses. In that case, the company faced problem in accomplishing the customer demand because gas was not enough stored in their storage destination. Under the certain contract, many pipeline companies supplied natural gas which was varying according to the heating season (Fujiwara et al. 2015). That means industrial consumers were deprived from the use of natural gas since these customers consumed gases entirely by business factors in spite of weather dependency. In other way, the company forced to be curtailed the demand of the industrial consumers and thus, has resulted in lost sales.

Secondly, the excess natural gas of CGC was putting into their underground storage for future use. Here the company made no boundaries on the storage field of gas, however, the company made sure that the storage field must be full at the commencement of each gas year. For this reason, the company could not provide demand to the industrial consumers in the middle of the gas year to accomplish the estimated demand and fill the storage field at the beginning of each gas year.

Problems in CGC's Planning Efforts

Thirdly, the company curtailed the demand of the usage of commercial and industrial consumers in maximum cases because the company projected their customer demand only as a function of the number of customers regardless the volume of the usage. Here the company did not even consider that industrial revenue per capital {$(65000000/2000) = $32500} is far more that the residential consumers {$(160000000/160000) = $1000} though the number of customer demand is low.

Fourthly, GGC’S planning efforts have not sufficiently controlled the supply so the company often faced problem of oversupply at the end of the gas year. However, this information is indeed necessary for establishing long term contracts with the pipeline companies.

Features of the new system of CGC:

By specifying all the above criteria, the newly hired director of CGC is offered a conceptual design framework for an effective system of information. This system is being developed for better analyzing the supply and demand in their interface. There are many features of the new system of CEG have been identified. These features are as follows:

Firstly, the system will provide a gas plan on monthly basis for the next 5 years where emphasis given on the initial year. By this process, the company can monitor the consumer’s demand more effectively. Currently, the company is providing natural gas service to 200000 consumers where most of the customers are used natural gas for their residential purpose. Here the residential consumer’s gas consumption is highly correlated with the weather (Hori et al. 2013). These demand variations can easily be monitored after the implementation.

Secondly, the integrated corporate planning system will help to monitor the monthly usage production. With the help of this data, the management of the company can make an effective decision regarding the gas storage system. Here the integrated storage system made restriction on the gas storage field. By the effective planning process, the project manager can make balanced decision between demand and supply well. Whenever, the projected demand will high, the gas can be transported by pipeline to patrons or can be put into underground storage for future use. Therefore, the company can reduce their cost regarding the gas storage field. In this way, the company can reduce the excess supply problem at the end of the gas year.

Thirdly, the new system will use the definite data during the estimation of the estimated demand for the year end. Here the projected demand will consider the gas volume usage by customers rather than the demand of the consumer.

Fourthly, the plan has indicated that further decisions of the company will be based on operating income of the specified period. Here the efforts would be given to enhance the operational efficiency of the company. Therefore, the company can try to reduce per unit costs by increasing the sales volume of during the end of the gas period.

Required data for adequate planning capability:

The following are the data which should be included into the new system of CGC to make the entire system adequate for executing capabilities.

Features of the New System of CGC

Firstly, the company needs to record the information of consumed energy on monthly basis. Here the projected customer demand will be evaluated with the estimated consumed energy of the natural gas (Cai et al. 2015). Furthermore, the storage field of the company can optimally use by the project manager, thus the company can avoid issues regarding the excess of supply.

Secondly, Previously customer demand has been anticipated only as a function of the total number of customers. According to the changed plan the company will exploit the genuine data during the year to project demand for every year. To enhance the planning capability the company should assess the revenue generation capacity related to the corresponding class of consumers. By this practice, the company will find that industrial consumers are the most potential consumers based on the highest consumption factor if the company evaluates data regarding revenue per customers (Buonocore 2016).  Therefore, the demand for gas should not be curtailed for higher capacity consumption. To increase the projected consumer demand of industrial consumers, the natural gas provider company should sale increased volume for business factors. Generally, the largest direct use of natural gas by the industry sector is for heating and cooling, process heating for glass melting, meals preheating, processing of foods, and drying. Therefore, CEG Company needs to explore their potentiality in the industry sector. This is only possible if the company give efforts to increase the availability and low prices of natural gas.

Thirdly, the design between the integrated storage size and the natural gas transmission must be developed for maintaining balance regarding the most effective and economical delivery technique (Thomas et al. 2016). Majority of the pipeline systems of natural gas are configured principally for the long distance transmission of gas from production regions to areas of market. This system of wide distance often called as trunklines. The company must ensure to receive the natural gas from their pipeline companies locally from the major local production areas or tricklines. I this way, the company can enhance their operational efficiency and stock turnover rate.

Fourthly, the company needs to incorporate data regarding the gas storage system. To improve the gas storage system the company can acquire additional storage facility in order to implement underground storage integration. This data regarding underground storage is an essential component of an efficient and dependable interstate natural gas transmission and distribution network. The adequate size and profile of the system of transmission system often depends in part on the availability of storage (Hault et al.2016). Therefore, the access of underground natural gas storage facilities shall be exploited by the project manager. For this, the company needs to get permits the mainline transmission pipeline operator to develop the portion of its system situated upstream of storage facilities to contain the total reserved capacity commitments. On the other hand, the portion of the system of transmission located downstream of the storage area is designed to hold the “maximum peak period requirements” of local distribution firms, and consumers in the area. This will generally influence on the withdrawal level of storage facilities to the system which will link to the projected demand requirement.

Data Required for Adequate Planning Capability

Fourthly, the risk management strategy regarding the ineffective demand supply curve needs to be considered to provide adequate planning capacity. In the case of the residential customer gas usage, the weather factor must be a risky element for decreasing demand of the company. To increase the selling efficiency the company must be prioritized their risk and mitigate accordingly. Though it is difficult to predict these circumstances, the company shall make the alternative plan.

Fifthly, the data regarding the operational expenses of CEG needs to be categorized. These operational expenses include gas transmission costs, costs relating to integrated storage sites, costs relating to the system monitoring technique, value of design process and so on. Under the new system of CEG, the company will take their decision based on the operating income. To increase the operational income, the company needs to increase volume of the sales in per cubic feet, reduce the labor and operational costs relating to the transportation of national gas along with the reduction of costs of goods sold.

Sixthly: To improve the efficiency, the company needs to implement Sensor testing. The pressure sensor in the test bed indentified a problem with the sensor. Here the company can identify the data sensitivity, reliability, accuracy and performance. On the other hand, the company should improve their drilling efficiency. The drilling productivity report will analyze drilling efficiency applying the average number of wells a rig which can drill over a period of time.

Seventhly: An effective monitoring system needs to be implemented for better planning control mechanisms (Fujiwara et al. 2015). The company should record the supply gas monitoring system to understand the variations and to find out the actual reasons for the downfall in sales at times. This monitoring system will record the growth of the revenue in order to mention the usage of the class of consumers. By this monitoring system, the company can easily understand that which section of consumers are responsible for the large growth of the company. All decision regarding the consumption will be taken on the volume of the sales or the achieved operating income of the company. This decision would be more reliable because “per unit consumption” can easily be monitored by the project manager.

Furthermore, in the devise of control is used to comply with the recommended RACT level of control, such devise must be required to operate at all times when vapors, gases, fumes are vented from the storage to decrease the mass content of emission. For this, the company should implement the devices for vapor recovery which operated to reduce the huge content of VOC in the gases, vented to the devise ninety five percent by weight (Khadem. and Boozarjomehry 2015). To make the carbon emission control mechanism effective, the owner of CEG should be required to develop the carbon replacement schedule for the successful carbon absorption process. This will ensure to continue compliance with the recommended control monitoring system within the interface.

Lastly, all the above mentioned data should be integrated into CGC’s new system to provide adequate planning capability. However, the company needs to improve the natural gas transmission system which the core area for excellence. Transporting gas from the wellhead to the end consumer involves several transfers of custody physically and multiple processing steps as well (Buonocore et al. 2016). In the new system, the company will buy natural gas from ten different pipelines companies in the volume specified contracts for a specified long period of time. In the new transmission process of natural gas the company will follow the following steps:

• Plant for processing: process of the extraction of impurities
• Develop system for mainline transmission: long distance pipelines transport natural gas from the area of production to market areas
• Centers of Market: At the point where pipelines intersect and flow are transferred
• Facilities for underground storage: Storage of natural gas for the future use
• Peak shaving: In this process, system will permit a gas pipeline to accomplish short term flows to fulfill the demand with minimal infrastructure

Conclusion

Based on the above analyzes of Citizen Gas Company, the researcher has identified several issues related to the previous system.  This company has faced many problems in order to maintain the customer demand with supply. There are several times supplied natural gas exceeds customer demands because the company was previously engaged in the number of consumer-driven contract in spite of the gas volume specific contract. However, this report provides a clear perspective and specified the structure and features of CGC’s new system. To resolve the identified problem of CGC, the authority of corporate planning of the company is represented with a conceptual design for an effective strategic information system which will help to make a detailed report at the gas year end. The company made several remarkable changes such as monthly gas plan for the next five years. This will help the company to develop a realistic aims and objectives of the company. For this, the company more emphasizes to review the actual data for project demand for the year. On the other hand, the corporate planner will base her decision by analyzing the company’s operating income as well. In this report, the researcher illustrated each data item that is important for adequate planning capability.

References:

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