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Success Stories - Feasibility of New Development Projects

New development projects have a significant impact on market fundamentals. Our solutions help customers meet their needs in planning new development because our solutions are designed to enable customers to analyze the markets with the new landscape after the changes, rather than merely applying historical data representing a previous landscape. There are other benefits, such as the easy customization, that enable users to model numerous combinations of potential future events. This flexibility, along with the transparency of our solution, enables customers to better understand the interrelationship of the many factors that contribute to market behavior.

Many of our customers prefer to remain anonymous. We respect this preference and have taken care to give examples of feasibility analysis for new development applications without providing names or geographic detail. We hope that these examples will help companies who don't know us to better understand how our solutions can help them, and also to see the deep experience of our people, so that they will give us the opportunity to discuss their needs and propose how we can help.

The success stories listed below provide examples of projects and customer experiences with Deloitte MarketPoint and also with MarketPoint Incorporated and Altos Management Partners. The history goes back a few decades, so in some instances the use cases refer to precursor versions of MarketBuilder and its current suite of models. As MarketBuilder has evolved over time it has been designed to better enable our customers to be more self-sufficient in utilizing our technology in their decision-making processes.

Selected Success Stories

Fundamental market analysis for power plant development in Southeastern U.S.

A large U.S. utility company wanted to know the fundamental economics of developing power plants at sites in a Southeast state, both contiguous to the interstate gas pipeline system running through the state and, more importantly to the company, not contiguous to the interstate system but downstream from its distribution system. The utility wanted Altos to identify and quantify electrically advantaged nodes throughout the state, recognizing that those that are contiguous to interstate gas systems are probably already taken. It hired Altos to build a detailed nodal model of the state's electric generation, transmission, and consumption system to guide their electric plant development decisions.

Market analysis for new power plants in ERCOT and WSCC

A major U.S. power company asked Altos to provide third-party market analysis to support ongoing decisions about building additional plants. Altos' analysis helped the company to successfully finance three projects in the western U.S., all ultra-modern gas combined cycle projects. The company used Altos and MarketPoint to analyze its toughest markets to understand (i.e., ERCOT and WSCC).

Market Analysis for the economic viability of nuclear plants in the U.S.

A U.S. government agency engaged Altos to perform market analysis of the economic viability, profitability, and market sustainability of various nuclear generation units arrayed throughout the Northeastern, Middle Atlantic, and Midwestern United States. Altos provided EIA with a report showing that under current and possible future market conditions, nuclear units are currently and are expected to remain viable in the market.

MarketBuilder customer - Analysis and valuation of U.S. peaking and specialty projects

A Southwest U.S. power and natural gas company concentrates on peak power generation and specialty products related to physical trading of off-peak for peak electricity and natural gas. It uses MarketBuilder to calculate the relative and absolute prices of peak versus off-peak power and peak versus off-peak gas. Their work with MarketBuilder was an integral component of the conceptualization, valuation, and financing of several peaking and specialty projects in the United States.

MarketBuilder customer - Natural gas decision support

One of the largest U.S. oil and gas production and pipeline companies used MarketBuilder to support a broad range of North American natural gas decisions including pipelines, LNG, upstream, price forecasting, and marketing and trading decisions. It has licensed MarketBuilder for internal use, as well as retaining Altos on a consulting basis to support its natural gas business.

ERCOT power plant development strategy

A large U.S. energy company engaged Altos to use MarketBuilder to support its ERCOT power plant development strategy.

Detailed analysis for operational and acquisition decisions in Pacific Northwest

A Northwest U.S. natural gas distribution company used MarketBuilder to build an extremely disaggregated model of the Pacific Northwest supply, pipeline, storage, distribution, and consumption system. The degree of disaggregation was sufficient to distinguish the major assets and portions of assets (e.g., pipeline segments) that affect gas prices, gas volumes, and profit abilities throughout the Pacific Northwest, taking into account the interconnections of that region with all other regions of North America. The company used this analysis in numerous critical operational and acquisition decisions.

Feasibility analysis for prospective synthetic oil refinery expansion

A large global strategy and management consulting firm asked Altos to build a model of refinery capacity for synthetic oil to calculate the estimated marketability and profitability of prospective plant expansions for their large oil and gas client.

Forward price analysis to decide development of power plants in WSCC

A large western U.S. energy company asked Altos to calculate nodal forward prices throughout the WSCC in order to help them decide whether to develop gas combined cycle plants at various locations in the WSCC.

Market analysis for power plant development decisions

A large global diversified energy company retained Altos to provide advice regarding a number of electricity trading decisions and power plant development decisions throughout North America. These business opportunities spanned North America.

Forward price analysis to decide development of power plants in MAIN

A large U.S. energy company engaged Altos to calculate nodal forward prices throughout the MAIN (Illinois, Wisconsin, Iowa and contiguous states) region and perform other market analysis in order to help them decide whether to develop gas fired power plants at various locations in MAIN.

Fundamental market analysis for evaluating viability of combined cycle plants

A major U.S. power company asked Altos to provide third-party market analysis in support of their (ultimately) successful financings of two combined cycle projects. The financings of those major company assets were, in part, based on the Altos analysis and reports, which projected fundamental forward prices and spark spreads in the market using MarketBuilder. Those market analysis reports demonstrated that the price differences in the market would be expected to more than sustain the cash coverage ratios desired by the financing institutions and, therefore, that the plants were projected to be able to service their estimated debt.

Fundamental analysis for the economic viability of power plant in U.S. Southeast

One of the largest natural gas and electric utilities in the U.S. asked Altos to be the lead economic witness to develop and put forth testimony before a Southeastern state's Public Service Commission supporting a new power plant development project in the state. The fundamental market analysis, reporting and testimony supported the utility's conclusion of the economic viability of the project.

Fundamental market analysis supporting power plant development decisions

A large global diversified energy company asked Altos to perform fundamental market analysis to support a number of power plant development and power trading decisions in North America.

Economic viability of merchant power plant projects in Florida

A global power plant developer and operator retained Altos as its chief economic witness to present their fundamental analysis in testimony before Florida's Public Service Commission supporting the economic viability of two proposed major merchant power plant projects.

Analysis for conception, development and operation of western U.S. cogeneration

A very early merchant repowering project: An independent power producer hired Altos to provide the market analysis used in key decisions in the conception, development and operation of a 100 MW western gas combined cycle cogeneration plant. The plant combines unique power purchase agreements and an operating plan to provide electric energy and capacity in the Western U.S.

Economic viability of building a pipeline in the Southern Cone of South America

A large global energy producer asked Altos to help them understand the economic viability of developing a prospective gas pipeline from Bolivia to Sao Paulo, Brazil, in the Southern Cone of South America. After building an extensive market model of the region, Altos helped them determine that the pipeline wasn't projected to be a profitable asset. The Altos Southern Cone model of South America emanated from that project.

Analysis for conception, development and operation of Western U.S. cogeneration

An independent power producer engaged Altos to provide the market analysis for key decisions in the conception, development and operation of a 270 MW gas combined cycle cogeneration plant. The plant combines unique power/purchase agreements and operating plans with low cost gas and is expected to provide low cost electric energy and capacity in the U.S. West.

Economic analysis of proposed multi-billion dollar natural gas project

Two large integrated oil and gas companies asked Altos to evaluate whether they should commit the billions of dollars necessary to develop and market a large, off-shore natural gas resource. Using their North American Regional Gas (NARG) Model, Altos analyzed the potential profitability and risk of these investments, which the companies used as part of their decision to move forward with the project. The resulting project economics were in line with the projections developed using NARG.

Fundamental analysis to assess the feasibility of New Mexico pipeline

The New Mexico legislature engaged Altos to analyze the feasibility of a new pipeline emanating from the San Juan basin and terminating in the Anadarko basin in Oklahoma and North Texas. Altos' analysis using the NARG Model was used by legislature as part of their decision that they should not put up state funds for a direct pipeline route but instead should consider incremental expansion.

Fundamental market analysis for development and operation of Southeastern U.S. cogeneration

A southern U.S. utility engaged Altos to provide the analysis for the conception, development, and operation of a gas combined cycle cogeneration unit.

Analysis to decide whether to proceed on numerous natural gas and power development projects

A large U.S. integrated energy company asked Altos to provide the analysis for evaluating a large number of prospective and existing assets. Together with other information, the company utilized the Altos analysis to decide to proceed on many power and natural gas projects.

Feasibility of pipeline upgrade and rehabilitation projects

An international oil and gas exploration and production company engaged Altos to help them with the valuation of numerous pipelines to determine the feasibility of rehabilitation and upgrading projects. Using various information, including the Altos analysis, the company decided to move ahead with the upgrades. The company's results were consistent with the Altos analysis.

Feasibility of new Canadian pipeline

A large North American oil and gas company retained Altos to perform the analysis that it used to assess the feasibility of a new pipeline in Canada. The analysis supported the company's view that because winter gas demand had grown dramatically compared to pipeline deliverability into the region, a large and increasing winter price differential justified the project.

Feasibility of acquiring power plants and natural gas field for vertically integrated strategy

A large U.S. energy company engaged Altos to perform the analysis for the feasibility of buying two diesel-powered combustion turbine generation plants in a South American country and also buying an interest in a contiguous natural gas field. The company's plan was to use the natural gas from that field for these two plants and potentially develop additional green field generation projects based on production from the gas field. Altos' thorough analysis helped the company to determine a vertically integrated, profitable strategy.

Feasibility of green field electric generation projects in SERC

A large U.S. integrated energy company retained Altos to help them analyze green field electric generation projects in SERC. They asked Altos to calculate the forward price of electricity in each of the SERC sub-regions with an eye toward understanding the tradeoffs between indigenous generation from old and new plants in SERC and inbound and outbound transmission to and from VACAR (Virginia and the Carolinas), Southern, TVA, Entergy, Southwest Power Pool, and Florida. Utilizing the Altos analysis, they were able to make numerous decisions regarding the projects.

Feasibility of a second natural gas pipeline in California

A natural gas distribution and pipeline company engaged Altos to help them assess the feasibility of developing a second natural gas pipeline into California after it was apparent that another new pipeline would enter the California market first, ahead of them. The company asked Altos to evaluate the potential future price differential across their proposed expansion project after it was built and after gas from Alberta was flowing into the Pacific Northwest and California markets (at whatever level the markets might want to absorb it).

They commissioned four separate, detailed market analyses, each 18 months apart, which were used by the company in its decision to finance the project. Altos' analysis demonstrated that not only was there room for the new pipeline in California but projected that it would run full from its inception, notwithstanding the prior entry of the other pipeline.

Furthermore, the traditional flows from the Permian and San Juan Basins would reverse direction and flow eastward rather than westward. Altos ultimately provided expert testimony and helped the company prevail in a FERC hearing in which they requested a roll-in pricing scheme to replace the initial incremental pricing scheme.

As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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