OpenLink's cMotion revolutionizes the integrated energy marketplace

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OpenLink's cMotion revolutionizes the integrated energy marketplace Powered By Docstoc
					         OpenLink’s cMotion revolutionizes
         the integrated energy marketplace
                                                By Matt Frye, Managing Director – OpenLink

S         eamlessly integrated within OpenLink’s industry-leading
          Endur framework, OpenLink’s cMotion is a new software
          module designed as a comprehensive logistics solution
for crude oil, re ned products, coal, LNG, and soft commodities.
cMotion complements OpenLink’s existing logistics applications:
                                                                           unit, and value. Any number of products can be con gured
                                                                           into cMotion for each commodity type. Multiple transportation
                                                                           types can be handled through con guration with a scheduling
                                                                           module, such as VLCC vessels, lightering vessels, barges, trucks,
                                                                           pipelines, and railcars.
gMotion for natural gas, and pMotion for electric power.
    Endur is a full, cross-asset framework supporting Straight-            New features create new advantages
Through-Processing (STP) from the front- through back-of ce                In weighing the pros and cons of integrating cMotion into a com-
that delivers full functionality and product coverage for today’s          pany’s business model, it is important to obtain a certain level
traders, risk managers, and operations professionals in the                of control on the speci c advantages the module can o er.
energy marketplace. This new STP solution o ers visibility and            cMotion enhances Endur’s already vast o ering of features as well as
single entry management of transactional data. When transac-                  those speci c to the transporting of crude oil, re ned products,
tional information changes, it is readily available throughout the        coal, LNG, and soft commodities.
system.                                                                       For instance, the user will be able to create volume strategies
     cMotion was designed and developed by OpenLink’s trans-              that will give ultimate exibility in managing trade volumes and
portation and petroleum industry experts for rail, truck, crude           transportation. The new functionality allows the user to break
and products pipelines, barge, and vessels. These transpor-               apart and strategize the transaction in the following ways:
tation modes share several things in common: the products                 • By location on a multi-location deal
transported have quality and quantity measurement require-                • By period on a multi-month deal
ments; there is a time delay between receipt and delivery of the          • By partial volume
product; the transactions for these products carry substantially          • By complete deal in the strategy
more information than other types of transactions; and pricing is         • By organizing similar trades by quality, location, or transporta-
sometimes based on events other than those typical to natural                tion methods
gas or electricity.                                                       • By single or multiple waterborne voyages
                                                                          • By single or trainload rail movements.
A comprehensive solution                                                       The system captures delivery ticket and inspection report
A diverse group of industries stand to bene t from cMotion ,              information for each loading or discharge event. All dates asso-
including large, integrated crude producers and re neries, pet-           ciated with the receipts and deliveries of product are maintained
rochemical supply chain organizations, large integrated energy            in the system. Quantity and quality measures are recorded.
  rms that make hydrocarbon procurement activities in support of          Pricing adjustments can also be made to the deal price, using
power generation, and independent trading rms or banks seek-              quality-based conditions con gured on the transaction.
ing an integrated solution for energy and commodity products.                 Additionally, Endur has been enhanced to allow for the pric-
    cMotion supports multiple commodities, grades, and trans-             ing, valuation, and payment triggering to be based o of event
portation types, manages nominations and nomination group-                dates such as bill of lading date, notice of readiness, commence-
ings, such as product commitments, transportation schedules,              ment dates, or any other user-con gured event date. This func-
and inventory movements, while at the same time handling                  tionality allows for the settlement of large monetary liabilities,
dates, such as nomination dates and changes, and delivery dates           based on events, not on the monthly billing cycle common to
supporting event-based pricing, valuation and payment. Addi-              other products.
tionally, cMotion can record deliveries, such as actual quantity
/ quality and price adjustments, and ticket pricing / valuation,           Calculating demurrage and delay
track action item “to-do” lists, and store documents and settle-           Demurrage can best be de ned as the monetary penalty
ments.                                                                     incurred from delays associated with the transportation of com-
    Not only can cMotion manage multiple commodities types,                modities. Most signi cantly among the types of demurrages
such as crude oils, NGL and LPG, re ned products, petrochemi-              are those in connection with the movement of commodities by
cals, coal, LNG, agriculture, etc, but it can also track standard          ocean going vessels. With cMotion , demurrage calculations
and reported quality measurements con gured into Endur for                 quantifying the signi cant delays, and resulting charges, can be
a given product. Each measurement line item de nes type,                   derived down to the minute.

                                                                          E ne r g y Tr a d ing & R is k M a na g e m e nt ◆ www.og .com
    This statement of excess time or “lay time statement” can be        management system, or store the document completely in the
 quickly generated by cMotion. This statement can then be com-          Endur database. This gives the user added information at his/
 pared to similar documents presented by vessel owners. Also,           her ngertips, speci c to the job function being performed.
 the demurrage calculator will prove helpful when attempting to             cMotion was designed to capture and manage all of the
 pass these charges through to commercial counterparties who            information required for the extensive noti cation and report-
 may consequently be responsible for the delays. The cMotion            ing processes within this industry. Standard reports required for
 demurrage calculator will assist with the all phases of calculating,   logistics noti cations; contract noti cation and con rmations
 invoicing, tracking, and organizing demurrage claims in the vari-      are part of the system. Most importantly, these reports are
 ous stages of the contentious settlement process.                      customizable by the client. cMotion provides the tools needed
                                                                        to quickly and accurately report information for external and
 Mark-to-intent valuation, action items,                                internal purposes.
 and inventory management                                                   Companies seeking to streamline business and maximize ef -
 The concept of mark-to-intent is to calculate the mark-to-market       ciency are encouraged to explore this new functionality in Endur
 valuation of a product at an intended location other than the          and to take advantage of these cutting edge technological tools
 location on the deal -- at a delivery date later than the load date    in the marketplace. As the global energy market becomes more
 on the original supply deal. The mark-to-intent valuation gives        competitive, the cost of lagging behind can quickly erode a
 a better representation of the movement of crude oil, re ned           leveraged position that means the di erence between pro t and
 products, coal, LNG, and soft commodities because of the time          loss. OpenLink’s cMotion is the next generation for scheduling
 delay in delivering the product. Natural gas and electricity on        and control, and the future for the integrated energy market-
 the other hand, can be modeled as concurrent receipts and              place.
     Extensive noti cations and documentation are required when         About the author
 dealing with the physical movement of commodities. To better           Matthew Frye is managing director of OpenLink’s Houston divi-
 aid commercial and operations personnel in the arduous process         sion. He has 20 years of experience in energy markets, including
 of a ecting a physical commodity transaction, cMotion employs          trading, risk management, and operations software. Frye leads
 an Action Item list or “To Do List.” This list serves as a means of    a team of business analysts and software engineers focused on
 automatically communicating data at the completion of a trans-         dynamic, integrated solutions for energy trading rms. He can be
 action or other signi cant event such as a scheduling nomination.      reached at 713-655-9600, or
 Notices to concerned parties can be con gured, customized and
 conveyed to commercial counterparties, operators, transporters,            About OpenLink Founded in 1992, OpenLink is a leading
 inspectors, etc. cMotion uses the list of actions to ensure that no    developer of energy and nancial trading, risk management, and
 activity falls through the cracks.                                     operations processing software solutions. The company’s Next
     cMotion also greatly enhances Endur in the area of inventory       Generation eXtensible (NGX) platform supports the most rigor-
 management/valuation. Endur will now handle di erent inven-            ous business requirements of rms trading in crude products,
 tory accounting methodologies, such as:                                energy, interest rate derivatives, xed income securities, foreign
                                                                        exchange, money markets, metals, softs and other commodities.
 LIFO – Last In, First Out                                              OpenLink’s global client base includes 70+ clients such as Banco
 FIFO – First In, First Out
                                                                        de Mexico, Bank of America, Bank for International Settlements,
 Weighted Average
                                                                        Bank of Canada, HBOS Treasury Services, Bridgeline Holdings,
     The value of delivery into the inventory tier/average will be      Citigroup Global Market, Inc., Deutsche Bank, Enbridge, Nexen,
 the cost of the supply plus transportation, adjusted for any unac-     Shell, Statoil and Vattenfall Europe Trading. Headquartered in
 counted for volumes.                                                   Long Island, New York, and with of ces in London, Houston,
                                                                        New York City, Berlin, Sydney, and São Paulo, OpenLink employs
 Simple, custom solutions                                               more than 370 professionals worldwide.
 cMotion gives a client the ability to blend products together
 to yield a di erent product, often with the intent of meeting a
 minimum commercially accepted quality. Blending and tracking
 of inventories by quantity and quality can be managed using
 cMotion ’s Inventory Manager, thus simplifying this burdensome
     Another simpli cation comes in the area of document                                           OpenLink
 management. OpenLink has enhanced Endur to include linking                                   1502 Reckson Plaza
                                                                                            15th Floor, West Tower
 documents to key areas of the system. These areas include                                   Uniondale, NY 11556
 contracts, transactions and nominations. The user can create a                         
 link to any type of stored document, a hyperlink to a document                                  516-227-6600

www.og .com ◆ Energy Trading & Risk Management                                                                                              13

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