Energy Resource Economics was fundamentally influenced by the development of the SRI-Gulf Energy Model in the pioneering early days of Silicon Valley. Today Deloitte MarketPoint is updating the GEMS modeling solution for the 21st century as a Platform as a Service. Find out more at www.deloittemarketpoint.com

1. Pioneering the
Energy Resource Economics Future
Generalized Equilibrium Modeling System (GEMS)
A 40th Anniversary Report by Deloitte MarketPoint
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© 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

2. Introduction
Deloitte LLP acquired MarketPoint1 in 2011 seeing value from its pioneering heritage in
general equilibrium modeling system (GEMS). Today Deloitte MarketPoint is making an
investment in updating and refreshing MarketBuilder software---a direct descendent of
GEMS---to incorporate a new generation of energy resource economic changes
anticipated in global markets.
Pioneering Energy Resource Economics: A 40th Anniversary Report on the Generalized
Equilibrium Modeling System (GEMS) is a short history of GEMS and how Deloitte
MarketPoint is leveraging one of the most important 20th century energy resource
economics intellectual properties into a compelling 21st century energy and commodity
resource economics future.
We recognize the work of Dr. Dale Nesbitt and Dr. Edward Cazalet, Silicon Valley
pioneers, who turned the theory behind GEMS into one of the most important and
enduring energy resource economics contributions of the 20th century at Stanford
Research Institute. The use of GEMS grew from their perseverance to produce the global
scale, highly configurable yet granularly detailed solutions that are still used today—
everyday---by some of the world largest and most influential oil and gas, energy and
resource, utility and strategic commodity companies.
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Deloitte MarketPoint LLC, the result of Deloitte’s acquisition of substantially all the assets of MarketPoint Incorporated and
Altos Management Partners (MarketPoint/Altos) in 2011, combines the global strength and quantitative experience of
Deloitte and the member firm network of Deloitte Touche Tohmatsu Limited with the market-leading software and timetested energy market success of MarketPoint/Altos. Deloitte MarketPoint is located within the Deloitte Center for Energy
Solutions.
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© 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

3. Figure 1
SOURCE: Deloitte MarketPoint
The North American configuration of the Multi-Fuel Integrated Energy Markets Model
depicted above is the newest release of this pioneering descendent from the SRI-Gulf
Energy Model---the first full scale applications of GEMS---the model that changed
energy resource economics 40 year ago.
This newly updated Multi-Fuels Integrated Markets Energy Model solution brings
together the fundamental analysis of demand for power generation while
simultaneously solving the trade-offs between fuel and technology choices, the growth
of renewable energy in regional markets and the challenge of greenhouse gas emissions
reduction in a set of integrated modeling simulations.
The modeling solution is designed to assist clients with least cost, best fit utility
integrated resource planning as well as profit maximizing portfolio analysis conducted
by merchant generators.
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© 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

4. From GEMS to MarketBuilder: A Pioneering History
Milestone
Date
Significance
Stanford
Research
Institute
CFE Mexico
1970
Generalized Equilibrium Modeling System (GEMS) research in economics
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and applied mathematics developed at Stanford Research Institute (SRI).
1972
SRI-Gulf
Energy Model
1973
SRI World
Energy Model
1976
Long Term
Energy Analysis
Program (LEAP)
1977
GRI
North American
Regional Gas
Model
1982
MarketPoint
World Gas Trade
Model
1992
MarketBuilder
Development
2002
Deloitte
MarketPoint
2011
The first rudimentary application of GEMS was an electric power planning
model for the national electric company of Mexico (Comision Federal
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Electricidad or CFE) and Gulf Chemical Co.
First full-scale application of GEMS at Gulf Oil used to mitigate losses in
synthetic fuels in the 1970s and 1980s. The SRI-Gulf model was integrated
into Gulf's internal forecasting, strategic planning, and decision support.
Multi-fuel, multi-model topology was expanded worldwide in 1976.
National Science Foundation commissioned a 1977 peer reviewed
methodological comparison of major energy models including the SRI-Gulf
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model validating GEMS.
US DOE and EIA sponsored a second generation GEMS project called "Longterm Energy Analysis Program" or LEAP to overcome limitations of the SRIGulf model. The EIA spent $1 million (in 1981$) with Oak Ridge National
Labs to validate LEAP and used it at the EIA until 1982.
Second generation GEMS commercialized at the Gas Research Institute
(GRI) to assess gas-on-gas competition. The North American Regional Gas
(NARG) Supply-Demand Model, helped GRI members and regulators better
understand how price signals through the gas system would transmit
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benefits from one region to all contiguous regions.
Concerns about global gas supply, demand and prices of LNG resulted in
development of the WGTM, a multi-region, network-oriented, supplydemand GEMS representation of world natural gas markets in a multi-client
project involving Amoco, ARCO, California Energy Commission, Chevron,
Enron, Exxon, Fina, Phillips, Shell and Texaco.
The original GEMS was converted to a new software language to take
advantage of multi-processor technology and enhanced with a state-of-theart Graphical User Interface (GUI) and renamed MarketBuilder.
Deloitte LLP acquired MarketPoint for the GEMS-derived MarketBuilder IP
to leverage the technology to support Deloitte Consulting practices and
customers worldwide. .
2
See Cazalet, E. G., Decomposition of Complex Decision Problems with applications to Electric Power System Planning,
Ph. D. dissertation, Stanford University, Stanford, California, 1970.
3
See Braunstein, Terry J., "A Decision Analysis of a Petrochemical Expansion Study," in The Principles and Applications
of Decision Analysis, Howard, R., and Matheson, eds., Strategic Decisions Group, 1983.
4
See Brock, H. and Nesbitt, D., Large Scale Energy Economic Models: A Methodological Analysis, Stanford Research
Institute report to the National Science Foundation, 1977.
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The commercial version of the model was called the North American Regional Gas (NARG) Supply-Demand Model,
the global version was called the World Gas Trade Model. Today the integrated modeling solution is called World Gas
Markets by Deloitte MarketPoint.
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5. Figure 2
Figure 3
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6. Fast Forward to 2013---The pioneers are still leading the way.
In 2013 as we marked the 40th anniversary of the first full scale application of the GEMS,
the first fruits of Deloitte MarketPoint’s R&D roadmap investment came to market as
updated Deloitte MarketPoint MarketBuilder software products and services:
·
·
·
·
·
MarketPoint World Oil Markets and World Gas Markets modeling solutions
were updated to reflect changes in shale development and LNG exports.
MarketPoint Multi-Fuels Integrated Energy Markets model has a new North
American configuration to assess competitive fuels and technology trade-offs,
growth of renewable energy, and reductions in greenhouse gas emissions ---all in
one integrated model simultaneously solving for projected power demand.
MarketPoint Natural Gas Liquids configurations added to MarketBuilder models
to capture the full value of liquid credits and its impact of natural gas drilling
economics in the simulation analysis.
MarketPoint Strategic Commodity Supply Chain models reflect changes in
global trade flows, manufacturing, export opportunities and risks and volatility.
MarketBuilder Interactive Managed Analytics Services offers customers choices
from traditional in-house models to interactive online services often with a lower
total cost of ownership than internal models.
The search for the sweet spots of market equilibrium where supply and
demand intersect and where profitability and growth accelerate is the
same today as it was when that first SRI-Gulf energy model helped to
change the way energy resource analytics was done 40 years ago.
Deloitte MarketPoint and its clients still benefit from the inheritance of that pioneering
energy resource economics. Today Deloitte MarketPoint provides energy resource
economics decision support solutions based on our SRI-Gulf Oil Energy Model heritage
to many of the world’s largest and most influential oil and gas, energy and utility, and
strategic commodity companies.
From super majors, to shale and LNG champions, to utilities and strategic commodities
from ammonia to zinc, GEMS-inspired Deloitte MarketPoint software and managed
analytics services deliver market fundamental analysis, expected price projections,
strategic analysis of issues and trends and their implications with the global reach of the
Deloitte Touche Tohmatsu Limited member firms across fuels, technologies and
competitive global markets. At Deloitte MarketPoint we are still pioneers leading
change in energy resource economics---join us----you can be part of making history too.
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© 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

7. About Deloitte MarketPoint
Deloitte MarketPoint is a leading provider of energy resource economics, market fundamental
analysis and strategic insight for the global oil, gas and power markets. MarketPoint helps clients
frame the uncertainty in their economic future. Using cutting-edge technologies, we offer
actionable decision support solutions that capture the way world markets actually work.
MarketBuilder is Deloitte MarketPoint’s microeconomic simulation software which enables
companies to analyze energy resource and commodity market fundamentals. It comes
preloaded with one or more Deloitte MarketPoint Reference Cases providing a high quality
starting point for analysis right out of the box. MarketBuilder software is available today as an
enterprise in-house solution and online as MarketPoint Interactive, a Platform-as-a-Service.
Deloitte MarketPoint LLC, combines the global strength and quantitative experience of Deloitte
and the member firm network of Deloitte Touche Tohmatsu Limited with its market-leading
MarketBuilder software. Deloitte MarketPoint is located within Deloitte Consulting Innovation.
www.deloittemarketpoint.com
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© 2013 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited