8 McBroom Extended OG Supply Chain

The Extended Oil & Gas Supply Chain

SAP Business Forum ’05 SeriesHouston, TexasMarch 22, 2005

Mickey McBroom, Industry Principal Downstream

Dirk Williams, Manager, Field Services, IBU Oil & Gas

Introduction & SCM Business OverviewSAP Solution OverviewExtending the SAP SCM SolutionNext Steps

© SAP AG 2005, Shell SCM Overview, Speaker Name 3

The Ecosystem and the Oil & Gas Supply Chain

Crude

NGL / LPG

LubricantsNatural Gas

RefinerRefiner DistributorDistributorProducerProducer RetailerRetailer

Refined Products

DistributorDistributor DistributorDistributorRefinerRefinerProducerProducer

Upstream Midstream Supply Refining Primary

SupplySecondary Distribution

Service Station &

Convenience Retailing


Large quantities of products managed on a global basisTypically long lead times for transportationHighly fungible market, both in terms of products and partnersLong term contracts the normal basis for business

Key Characteristics in Oil & Gas

What is Downstream Oil & Gas Supply Chain Management?

“Integrated Supply Chain Management (ISCM) is a process-oriented, integrated approach to procuring, producing, and delivering products and services to customers.” [M.I.T] Supply chain management involves coordinating, integrating and executing these

flows both within and between companies.SCM’s aim is to optimize the activities occurring along the supply chain to maximize

asset usage, minimize costs and drive maximum revenue from the activity.Within the Oil and Gas Industry, we typically describe SCM stages of planning,

scheduling and execution as taking place, with constant and ongoing trackingparallel to these.

What is Supply Chain Management? A few definitions …


Creates imbalances and inefficiencies along supply chain

Lack of collaboration between supply chain partners

Creates disruptions to company operations and management

Creates possibility of distress spot contracts

High occurrence of M&A

Lack of Risk Management

ObservationsKey IssuesLack of visibility and lack of integration of supply chain

Rationalizing Supply Chain network

Need for real time data visibility and ability to perform “what if” scenarios to quickly adjust operating plans

Lack of ability to rapidly respond to real world scenarios

Lack of central source of mission critical dataLack of global industry wide standards

Key Issues for Supply Chain Management


All Steps of the Process are Integrated and Seamless1. Planning & Optimization

Demand PlanningRefinery planningUpstream planningCrude supply planningProduct supply planningTrading Plan

2. Operations & SchedulingSchedule BuildingSchedule BalancingSchedule updatesInventory Management Trading Operations

3. Execution & SettlementCustody TransferEvent managementBack Office UpdatesInvoicing / Payments

4. Evaluation & AnalysisProfit Loss AnalysisOptimization of InventoryRisk ManagementPerformance Monitoring

A Fully Integrated, Closed-Loop Process


SAP Oil & Gas SCM Solution Release Timeline

Global Industry Advisory Council

Oil & Gas Components

mySAP SCM Components

Industry

Industry Experience

TSW Focus Group

SAP APO started

Demand Planning

Network Planning

Production Planning

Event Manager

Inventory Hubs

Pilot case CITGO live

Saudi Aramco

Equiva

BHPBilliton / TOTAL

Pemex Gas +++

TSW started

1st release

Major 4.6cGas

SCM Integration

Time / Releases

A Collaborative Approach to Solution Development


Supply Network Scenario - Geographical

Off-/Onshore Wells

Sugarland Crude Pipeline

Colonial Products Pipeline

Baton Rouge Refinery / Terminal

St. James Terminal

O/G

Marine Supply


Off Galveston

NWE Rotterdam

Onshore / Offshore Wells

Doraville

Greensboro

Baton Rouge

St. James

Off Galveston

NWE Rotterdam


Doraville

Greensboro

Baton Rouge

St. James

Major Roles in the Supply Chain - Pipeline

Crude Pipe Scheduler

Crude Marine Scheduler

Colonial Pipeline

Scheduler

Refinery Manager

Terminal Manager

Crude Trader

Products Trader

Marine Carrier

Pipeline OperatorPartner

TraderPartners

Demand Manager

Supply Manager

Exchange Manager

Supply Network Manager


What’s happening? Supply Chain Management

Doraville

Greensboro

Baton Rouge

Doraville

Greensboro

Baton Rouge

Rack exchange

Rack sales• Partner• Own

Rack exchange


Bulk contract sales

Rack exchanges


Bulk contract salesBulk transfers

Bulk transfers

Bulk transfers

Own statistical Forecast

Customer Nomination

Partner Supplied forecast

Own Scheduling and Nomination


SAP for Oil & Gas Solution Map:Supply, Transmission and Trading

Suppliers & Partners Customers & Channels

Exploration & Appraisal

Development & Production

Hydrocarbon Supply & Gas Transmission

Refining & Manufacturing

Primary Distribution

Terminal Management

Secondary Distribution

Commercial Sales &

Retailing

Upstream Exploration and Appraisal

E&P Contract Management Field Development

Liquid and Gas Production Allocation and Settlement

Oil Field Service and Repair Operations

Supply, Transmission & Trading Bulk Supply Chain Planning and Optimization Bulk Supply Chain Operations and Scheduling Bulk Supply Chain Execution and Settlement Bulk Supply Chain Reporting and Analytics Physical Oil and Gas Commodity Trading

Oil and Gas Paper Trading and Risk Management

Refining & Manufacturing

Refining Operations Lubes Manufacturing Operations

Downstream Marketing & Retailing

Marketing Planning and Execution Sales Planning and Account Management

Opportunity to Cash Customer Service

Terminal Management Hydrocarbon Products Transportation

Service Station Fuel Management Convenience Retailing

Asset Management Enterprise Asset Management

Enterprise Management & Support Analytics Financials

Human Capital Management Corporate Services Operations Support


Mapping the SAP Solution

Supply, Transmission & Trading Bulk Supply Chain Planning and Optimization

Supply, Transmission & Trading Bulk Supply Chain Operations and Scheduling

SAP Solution

• SAP Advanced Planning & Optimization (SAP APO)• Demand & Supply Planning & Forecasting• Collaborative Planning• Supply Network Planning & System Balancing• Global Available to Promise

•See also overlapping area below …

SAP Solution

• SAP Traders’ & Schedulers’ Workbench (SAP TSW)• Planning to Operations and Scheduling Cycle• Nomination Management• Inventory Planning• Custody Transfer Handling

• SAP Event Management (SAP EM)• Integration into Real World events• Monitoring & Alerting

1. Planning & OptimizationDemand PlanningRefinery planningUpstream planningCrude supply planningProduct supply planningTrading Plan

2. Operations & SchedulingSchedule BuildingSchedule BalancingSchedule updatesInventory Management Trading Operations


Mapping the SAP Solution

Supply, Transmission & Trading Bulk Supply Chain Execution and Settlement

Supply, Transmission & Trading Bulk Supply Chain Reporting and Analytics

SAP Solution

• SAP IS-Oil Downstream (IS-Oil) including…• Exchanges• Commodity Pricing (formula / average pricing)• Quantity Conversion handling• Tax and Duty Handling• Silo Management• TAS Interfacing• Transportation Execution & Settlement

• SAP Event Management (SAP EM)

SAP Solution

• SAP Business Information Warehouse (SAP BW)• Standard Reporting• Flexible definition reporting• Supports KPI analyses

• Strategic Enterprise Management (SAP SEM)• Linking in data from the overall solution set and

external data sources

3. Execution & SettlementCustody TransferEvent managementBack Office UpdatesInvoicing / Payments

4. Evaluation & AnalysisProfit Loss AnalysisOptimization of InventoryRisk ManagementPerformance Monitoring


Off Galveston

NWE Rotterdam

Onshore / Off

Galveston

NWE Rotterdam


DoravilleProd. Terminal

GreensboroProd. Terminal

Baton RougeRefinery

St. JamesCrude Terminal

Reservoir to Terminal – The Solution(s)

APO

APO – Advanced Planner & OptimizerAPO – Advanced Planner & Optimizer

APO

APO

TSW

TSW

TSW

TSW

TSW

TSW

TSW – Traders‘ & Schedulers‘ WorkbenchTSW – Traders‘ & Schedulers‘ Workbench

EM – Event ManagerEM – Event Manager

IS-OIL – Industry Solution OilIS-OIL – Industry Solution Oil

Marine

Crude Pipeline

Product Pipeline


Introducing Trading for Oil & GasSupply, Transmission & Trading Physical Oil and Gas Commodity Trading

Supply, Transmission & Trading Oil and Gas Paper Trading and Risk Management

SAP Solution

• SAP Global Trade Management (SAP GTM)• Trading Contract• Contract Management• Trade Expense Management• Position Reporting

SAP Solution

• SAP Treasury & Risk Management (SAP TRM)• Paper Deal Capture• Risk Management• Hedging• Reporting


NetWeaver for Integrated Trading & Operations

NetWeaver

NetWeaver

Deal Capture Nomination Shipment SettlementPosition

Planning

InventoryERP Terminal(external)SchedulingTrading

(external)Trading (internal)

Supply /DemandPlanning

MDM

Portal BI

XI

Collaboration

Process Integration

Trading office

Operations Office

Accounting


Trading & Operations Business Landscape

Physical Trade Management

Paper Trade and Risk Management

Complex Risk Management and

Modeling

Logistics Operations Management

Financial Execution and Management

Enterprise Reporting and Analysis

Deal Capture

Market Tracking & Analysis

Trading Decision Support & Optimization





Modeling




Deal Capture



SAP Oil & Gas Integrated Trading, Risk Mgmt & Operations Initiative

TSW and IS-Oil / mySAP ERP

mySAP BI (BW and SEM)

SAP GTM

Integration

SAP BW / 3rd Party Solution

SAP Deal Capture

SAP TRM

SAP BW Basis





Modeling




Deal Capture



SAP Oil & Gas Integrated Trading, Risk Mgmt & Operations Initiative

TSW and IS-Oil / mySAP ERP

mySAP BI (BW and SEM)

SAP GTM

Integration

SAP BW / 3rd Party Solution

SAP Deal Capture

SAP TRM

SAP BW Basis

xITRO


Next Steps

Industry Workshops to Gather Requirements

Develop Industry Momentum

Quantify Industry Support

Finalize Development Business Case (SAP)

Develop Collaborative Buildout/Rollout Plan

8 McBroom Extended OG Supply Chain

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