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Oilman Magazine / November-December 2018 / OilmanMagazine.com
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OILMAN COLUMN
are making available ever more value-added
services addressing needs in the areas of credit,
risk management and regulatory reporting/
compliance. Consider exploring these libraries
of functions to optimize mid- and back-ofce
processes for even more near-term benet.
Digital Extension:
Enable digital assistant
placement of derivative orders. Provide a key
building block for algorithmic trading.
Utilize Electronic Trade Conrmation
Services
Blockchain is all the rage and offers a number
of signicant long-term benets, especially
as adoption increases among major market
players. Meanwhile, there are already more
than 1,000 market participants that have
been using eConrm for as long as 15 years
to electronically process millions of trades.
The previous two quick hit opportunities
seek to simplify exchange-traded transaction
processing, as well as a portion of the lifecycle
for high-volume, low-complexity physical trades.
eConrm represents a logical, incremental step
in physical trade automation that can bring a
level of efciency paralleling that which is more
commonly available for derivatives.
Counterparts and brokers that elect to submit
and match trade conrmations using eConrm
can take advantage of clear status tracking,
eliminate paper/fax/email and minimize user
error, thus reducing operating costs. eConrm
can be most expeditiously deployed in instances
where grades, schedules, pricing, counterparties
and other primary economic terms are highly
standardized (sound familiar?). Often, one
of the most signicant obstacles to adoption
of eConrm is centered around master
agreements, but getting this work out of the
way can accelerate the adoption of this, as well
as other enabling technologies, later.
Pre-Digital Opportunity:
Step 1 was to develop
and deploy APIs or web services for trade entry.
Step 2 capitalized on that foundation and inte-
gration with the exchange to optimize derivative
transaction processes. In this instance, the op-
portunity is to pass your trade data in conrma-
tion form directly from your trading system
to eConrm to allow for automated matching
with your business associate. Human interven-
tion will only be required on an exception basis
when terms don’t match. Blockchain may be
coming, but it will be difcult and expensive to
capture the benets promised without agreed
upon contract terms and a standardized transac-
tion data model combined with an API/web
service infrastructure for third- party transac-
tion processing.
Digital Extension:
Blockchain to enable
efcient, transparent, and secure digital
transaction ledgers between participants across
the transaction lifecycle. To read more about
how this technology is being applied in the
energy industry read “As Energy Markets
Evolve, Blockchain Powers Up” by Shane
Randolph of Opportune LLP.
Automate Market Data Feeds
Many reners already have quite nely tuned
systems for processing a rack BOL (Bill of
Lading), applying a price, generating an invoice,
distributing it to the customer and collecting
funds. The combination of people, process and
technology is all geared to produce an accurate
invoice and collect cash, but there are many
processes well up stream of ticketing or lifting
that could benet greatly from more timely and
reliable availability of market data.
Pre-trade analytics and risk management
both require access to signicant amounts of
price data, but in many cases rely heavily on
spreadsheets, downloads and manual entry
to meet daily objectives. As a result, valuable
quantitative analyst time is spent performing
data cleansing and entry tasks rather than on
assessing market risk and market opportunity.
Most commercial organizations already license
at least one technology and subscribe to some
source for market data whether that means
using GlobalView, Thomson Reuters or
sourcing directly from publishers like Platts. The
major vendors offer desktop (often Excel), API,
historical and streaming data solution options
that can be integrated into existing Enterprise
Resource Planning (“ERP”) and ETRM
systems directly to enable efcient end-of-day
processing, mark-to-market, VaR (i.e., value at
risk) and many other valuable risk analyses.
Pre-Digital Opportunity:
Create an inventory
of the tools and publishers your organization
employs to gather and process market data.
There are likely opportunities to rationalize and
standardize to reduce cost without adversely
affecting the availability of valuable price series
data to the enterprise. Once some consolidation
of source and solution has been performed,
create integration to directly deliver prices and
corrections to the data warehouses, ETRM
and ERP systems that use this information to
support analytics and transaction processing.
Don’t forget about the need to include broker
and trader assessments in these technical and
process solutions. For instances where prices
must be entered manually the same type of UI
(User Interface) and API solution framework
used for trade entry can be applied.
Digital Extension:
Machine learning to identify
market opportunities and enable algorithmic
trading.
Enhance Integration with Logistics
Partners
Seemingly innumerable processes are dependent
on timely and accurate information concerning
the movements of products through the
logistics systems exercised by downstream
companies. They run the gamut from risk
control reports, to inventory rundowns, to
month-end accruals and more. All of these
require the best available information on pump
dates, load dates, actual quantities, qualities, etc.
Often, the best available information exists
in the systems of your logistics partners or
service providers, and the best solution is to
interface that data into the IT environments
used for scheduling and ticketing. This type of
integration can also facilitate rapid ticketing
through invoice processing for other MOTs
(Modes of Transport) such as pipeline and rail.
Pre-Digital Opportunity:
Explore the
opportunity to integrate your ERP or ETRM
system with applications like Transport4 to
make available near real-time information
about your company’s nominations, tickets
and inventory moving on the pipeline systems
of afliated carriers. This integration has the
potential to reduce duplicate nomination entry
for schedulers and eliminate manual entry of
pipeline tickets for the back ofce.
For rail movements, Bourque Logistics offers
similar capability through its RAILTRAC
solution. Solutions for cargoes are available
from providers such as Navarik and their
TICithub. Integrating these systems can reduce
manual and duplicate effort for schedulers, loss
control and accounting functions.
Digital Extension:
Combine predictive analytics
and Robotic Process Automation (RPA) to
identify and execute on opportunities for
supply chain system optimization. For more on
predictive analytics take a look at “Optimizing
Your Logistics Network Through Model-Driven
prescriptive Analytics” by Chris Hedge of
Opportune LLP.
Kent Landrum is a
Director with the Process
& Technology group at
Opportune LLP. He has
more than 17 years of
diversied information
technology experience with an emphasis on
solution delivery for the energy industry.
Kent has a proven track record of managing
full life cycle software implementation
projects for downstream and utilities
companies, including ETRM, ERP, BI, MDM
and CRM. Prior to joining Opportune,
he served as a Vice President and Chief
Information Ofcer at CPS Energy. Kent
holds a B.S. degree in Computer Science
and Economics from Trinity University
and a Master’s degree in Organizational
Development from the University of the
Incarnate Word.
