OpenLink`s cMotion revolutionizes the integrated energy marketplace

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, refi ned products, coal, LNG, and soft commodities.
cMotion complements OpenLink’s existing logistics applications:
gMotion for natural gas, and pMotion for electric power.
Endur is a full, cross-asset framework supporting StraightThrough-Processing (STP) from the front- through back-offi ce
that delivers full functionality and product coverage for today’s
traders, risk managers, and operations professionals in the
energy marketplace. This new STP solution offers visibility and
single entry management of transactional data. When transactional information changes, it is readily available throughout the
system.
cMotion was designed and developed by OpenLink’s transportation and petroleum industry experts for rail, truck, crude
and products pipelines, barge, and vessels. These transportation modes share several things in common: the products
transported have quality and quantity measurement requirements; there is a time delay between receipt and delivery of the
product; the transactions for these products carry substantially
more information than other types of transactions; and pricing is
sometimes based on events other than those typical to natural
gas or electricity.
A comprehensive solution
A diverse group of industries stand to benefit from cMotion ,
including large, integrated crude producers and refineries, petrochemical supply chain organizations, large integrated energy
firms that make hydrocarbon procurement activities in support of
power generation, and independent trading firms or banks seeking an integrated solution for energy and commodity products.
cMotion supports multiple commodities, grades, and transportation types, manages nominations and nomination groupings, such as product commitments, transportation schedules,
and inventory movements, while at the same time handling
dates, such as nomination dates and changes, and delivery dates
supporting event-based pricing, valuation and payment. Additionally, cMotion can record deliveries, such as actual quantity
/ quality and price adjustments, and ticket pricing / valuation,
track action item “to-do” lists, and store documents and settlements.
Not only can cMotion manage multiple commodities types,
such as crude oils, NGL and LPG, refined products, petrochemicals, coal, LNG, agriculture, etc, but it can also track standard
and reported quality measurements configured into Endur for
a given product. Each measurement line item defines type,
unit, and value. Any number of products can be confi gured
into cMotion for each commodity type. Multiple transportation
types can be handled through configuration with a scheduling
module, such as VLCC vessels, lightering vessels, barges, trucks,
pipelines, and railcars.
New features create new advantages
In weighing the pros and cons of integrating cMotion into a company’s business model, it is important to obtain a certain level
of control on the specifi c advantages the module can offer.
cMotion enhances Endur’s already vast offering of features as well as
those specific to the transporting of crude oil, refined products,
coal, LNG, and soft commodities.
For instance, the user will be able to create volume strategies
that will give ultimate flexibility in managing trade volumes and
transportation. The new functionality allows the user to break
apart and strategize the transaction in the following ways:
• By location on a multi-location deal
• By period on a multi-month deal
• By partial volume
• By complete deal in the strategy
• By organizing similar trades by quality, location, or transportation methods
• By single or multiple waterborne voyages
• By single or trainload rail movements.
The system captures delivery ticket and inspection report
information for each loading or discharge event. All dates associated with the receipts and deliveries of product are maintained
in the system. Quantity and quality measures are recorded.
Pricing adjustments can also be made to the deal price, using
quality-based conditions configured on the transaction.
Additionally, Endur has been enhanced to allow for the pricing, valuation, and payment triggering to be based off of event
dates such as bill of lading date, notice of readiness, commencement dates, or any other user-configured event date. This functionality allows for the settlement of large monetary liabilities,
based on events, not on the monthly billing cycle common to
other products.
Calculating demurrage and delay
Demurrage can best be defined as the monetary penalty
incurred from delays associated with the transportation of commodities. Most significantly among the types of demurrages
are those in connection with the movement of commodities by
ocean going vessels. With cMotion , demurrage calculations
quantifying the significant delays, and resulting charges, can be
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.ogfj.com
This statement of excess time or “lay time statement” can be
quickly generated by cMotion. This statement can then be compared to similar documents presented by vessel owners. Also,
the demurrage calculator will prove helpful when attempting to
pass these charges through to commercial counterparties who
may consequently be responsible for the delays. The cMotion
demurrage calculator will assist with the all phases of calculating,
invoicing, tracking, and organizing demurrage claims in the various stages of the contentious settlement process.
Mark-to-intent valuation, action items,
and inventory management
The concept of mark-to-intent is to calculate the mark-to-market
valuation of a product at an intended location other than the
location on the deal -- at a delivery date later than the load date
on the original supply deal. The mark-to-intent valuation gives
a better representation of the movement of crude oil, refined
products, coal, LNG, and soft commodities because of the time
delay in delivering the product. Natural gas and electricity on
the other hand, can be modeled as concurrent receipts and
deliveries.
Extensive notifications and documentation are required when
dealing with the physical movement of commodities. To better
aid commercial and operations personnel in the arduous process
of affecting a physical commodity transaction, cMotion employs
an Action Item list or “To Do List.” This list serves as a means of
automatically communicating data at the completion of a transaction or other signifi cant event such as a scheduling nomination.
Notices to concerned parties can be configured, customized and
conveyed to commercial counterparties, operators, transporters,
inspectors, etc. cMotion uses the list of actions to ensure that no
activity falls through the cracks.
cMotion also greatly enhances Endur in the area of inventory
management/valuation. Endur will now handle different inventory accounting methodologies, such as:
LIFO – Last In, First Out
FIFO – First In, First Out
Weighted Average
The value of delivery into the inventory tier/average will be
the cost of the supply plus transportation, adjusted for any unaccounted for volumes.
Simple, custom solutions
cMotion gives a client the ability to blend products together
to yield a different 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
task.
Another simplification comes in the area of document
management. OpenLink has enhanced Endur to include linking
documents to key areas of the system. These areas include
contracts, transactions and nominations. The user can create a
link to any type of stored document, a hyperlink to a document
www.ogfj.com ◆ Energy Trading & Risk Management
management system, or store the document completely in the
Endur database. This gives the user added information at his/
her fi ngertips, specifi c to the job function being performed.
cMotion was designed to capture and manage all of the
information required for the extensive notification and reporting processes within this industry. Standard reports required for
logistics notifi cations; contract notifi cation and confirmations
are part of the system. Most importantly, these reports are
customizable by the client. cMotion provides the tools needed
to quickly and accurately report information for external and
internal purposes.
Companies seeking to streamline business and maximize effi ciency are encouraged to explore this new functionality in Endur
and to take advantage of these cutting edge technological tools
in the marketplace. As the global energy market becomes more
competitive, the cost of lagging behind can quickly erode a
leveraged position that means the difference between profit and
loss. OpenLink’s cMotion is the next generation for scheduling
and control, and the future for the integrated energy marketplace.
About the author
Matthew Frye is managing director of OpenLink’s Houston division. He has 20 years of experience in energy markets, including
trading, risk management, and operations software. Frye leads
a team of business analysts and software engineers focused on
dynamic, integrated solutions for energy trading firms. He can be
reached at 713-655-9600, or [email protected].
About OpenLink Founded in 1992, OpenLink is a leading
developer of energy and financial trading, risk management, and
operations processing software solutions. The company’s Next
Generation eXtensible (NGX) platform supports the most rigorous business requirements of firms trading in crude products,
energy, interest rate derivatives, fi xed income securities, foreign
exchange, money markets, metals, softs and other commodities.
OpenLink’s global client base includes 70+ clients such as Banco
de Mexico, Bank of America, Bank for International Settlements,
Bank of Canada, HBOS Treasury Services, Bridgeline Holdings,
Citigroup Global Market, Inc., Deutsche Bank, Enbridge, Nexen,
Shell, Statoil and Vattenfall Europe Trading. Headquartered in
Long Island, New York, and with offices in London, Houston,
New York City, Berlin, Sydney, and São Paulo, OpenLink employs
more than 370 professionals worldwide.
OpenLink
1502 Reckson Plaza
15th Floor, West Tower
Uniondale, NY 11556
www.olf.com
516-227-6600
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