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E-COMMERCE STANDARDS:A STRATEGIC IMPERATIVE
Ian Anderson
Electronic Commerce for Oil & Gas
London, January 28, 1999
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OUTLINE
Focus on Natural Gas: Concepts applicable to oil (and other products and
services).
Background. The Standards:
Business Practices. Electronic Commerce.
Accomplishments. Q & A.
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GasEDI (1)
Sponsored by CAPP, SEPAC, CGA, CEPA: Canadian Association of Petroleum Producers (CAPP)
and Small Explorers and Producers Association of Canada (SEPAC) - represent Canada’s natural gas and crude oil producers.
Canadian Gas Association (CGA) and Canadian Energy Pipeline Association (CEPA) - represent Canada’s natural gas transporters and distributors.
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GasEDI (2)
Mission: Promote the development and implementation of
North American business and electronic information standards to improve the competitive position of natural gas. We believe all participants in the gas industry - including end
use consumers - are best served by a vibrant, efficient, industry - from well head to burner tip.
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GISB
Gas Industry Standards Board (US). Mission:
Develop business and electronic commerce standards for the gas industry: Applicable across North America. Participation by Canadians and Mexicans.
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FERC (1)
Federal Energy Regulatory Commission (US). Public Conference - Sep 21 95:
Too many differences in basic services. Difficult and labour intensive to manage gas.
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FERC (2)
Examples: Company managing “energy” - coal, heavy fuel, electricity,
gas: customer effort to manage gas = 6 times the customer effort to manage equivalent amount of other energy types.
Nomination: Instruction to transport gas from point A to point B. Only 21 data elements required (Apr 90 industry
consensus report). Without standards - over 80 different data elements
required to transport gas across daisy chain of pipelines.
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US GAS: 1967-1997
0
5
10
15
20
25
1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997
0
2
4
6
8
10
<= Consumer TCF/YR
Wtd Avg US$/MCF =>
<==Tight Control==> <=Competition=>
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STANDARDS SUMMARY (1)
GISB has developed business practice and electronic commerce standards. US interstate pipelines must implement most
standards: FERC mandate.
Optional, but often being implemented: Other US pipelines. Other gas industry participants. Canada. Mexico.
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STANDARDS SUMMARY (2)
Transacting in Energy. Gas Day. Nominations. Flowing Gas / Invoicing. Capacity Release. Electronic Delivery Mechanisms. Internet. Contracts.
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TRANSACTING IN ENERGY
Standard units of measure: US: Dekatherms (Dth).
1 Dth = 1,000,000 Btu(IT).
Canada: Gigajoules (GJ). 1 Dth = 1.055056 GJ.
Mexico: Gigacalories (GC). 1 Dth = 0.251996 GC.
Btu(IT) = International Btu (British Thermal Unit).
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GAS DAY
GISB standard gas day: Beginning and ending at 9:00 am central clock time. Winter: Standard time. Summer: Daylight time.
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NOMINATIONS (1)
All times are Central Clock Time:
Cycle Nomination Deadline Scheduled Quantity Flow Start Bumping
Timely 11:30 am, Day before GasDay
4:30 pm, Day beforeGas Day
9:00 am NotApplicable
Evening 6:00 pm, Day before GasDay
10:00 pm, Day beforeGas Day
9:00 am Allowed
Intra-Day 1 10:00 am, Gas Day 2:00 pm, Gas Day 5:00 pm Allowed
Intra-Day 2 5:00 pm, Gas Day 9:00 pm, Gas Day 9:00 pm No
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NOMINATIONS (2)
Firm Evening and Firm Intra-Day 1 Nominations have priority over (can bump) scheduled interruptible service.
Firm Intra-Day 2 Nominations do not have priority over scheduled service.
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NOMINATIONS (3)
Use electronic transactions: The gas industry can only meet the GISB nomination /
confirmation schedule through the use of standard electronic transactions.
Fax is not electronic, because an inbound fax is not automatically computer processable.
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NOMINATIONS (4)
Concerns: Feasibility of concurrently nominating on many
pipelines. This concern relates to both human issues (dealing with a multitude of “last minute” decisions) and communication issues.
Pipelines’ ability to complete all tasks necessary to provide timely shipper scheduled quantity statements.
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FLOWING GAS / INVOICING (1)
GISB Standards: Measurements by the 5th business day. Allocations before or with the invoice. Invoice by the 9th business day. Settlement not standardized (anti-trust issue). Prior period adjustments limited to 6 months.
Settle within 3 more months.
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FLOWING GAS / INVOICING (2)
Clarify the predetermined allocation methodologies currently in place at interconnects between pipelines to ensure the best choices are in place.
Implement OBAs (Operational Balancing Agreements) at more interconnects.
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FLOWING GAS / INVOICING (3)
Gas production: US:
Well owners produce gas. Production per individual owner instructions. Unmarketed gas stays in the ground.
Canada: Wells produce gas. Production in working interest shares. Unmarketed gas carried with marketed gas.
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CAPACITY RELEASE
US: FERC:
Pipeline spare capacity released and bid for using complex, open, offer / bid process.
Canada: National Energy Board, Feb 2 95:
“Secondary market … working well without regulatory oversight … continue to evolve according to the needs of the parties involved …”.
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ELECTRONIC DELIVERY MECHANISMS
GISB’s standard formats for transferring electronic documents: EDI = Electronic Data Interchange.
Data transfer over the internet.
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INTERNET (1)
Already in use for data gathering and sharing. Communication layer for transferring EDI
documents. EDI = computer application to computer application
exchange of ordinary business documents (purchase orders, invoices, etc) in a public standard electronic format.
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INTERNET (2)
FERC regulated pipelines must migrate from proprietary EBBs (Electronic Bulletin Boards) to the internet.
Developing electronic contracting - expect to implement in early 2000.
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CONTRACTS (1)
Not mandated by FERC. Developing usage “momentum”. Trading Partner Agreement (EDI):
On paper, signed in ink. Parties agree to be obligated to perform per electronic
documents.
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CONTRACTS (2)
Short Term Gas Purchase / Sale Agreement: On paper, signed in ink. Standardized contract designed for gas purchase /
sale up to 1 month. Actually being used for gas purchase / sale up to 1
year. Could be used as basis for electronic contract.
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CONTRACTS (3)
Electronic Contracting: Under development. Initially intended for executing proforma gas
transportation contracts - largely non-negotiable. Digital signature. Usage expected early 2000.
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ACCOMPLISHMENTS
North America wide consensus on: Over 200 business practice standards. EDI Implementation Guides.
Extensive training. Adoption - both per FERC mandate and
voluntary.
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SUMMARY
Focus on Natural Gas: Concepts applicable to oil (and other products and
services).
Background. The Standards:
Business Practices. Electronic Commerce.
Accomplishments.
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Q & A
Questions?
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E-COMMERCE STANDARDS:A STRATEGIC IMPERATIVE
Ian AndersonPrincipal Consultant - I. S. Anderson & Associates Limited
Business Reengineering Electronic Commerce EDI
100 - 1039 - 17 Avenue SW, Calgary, Alberta, Canada T2T 0B2
Tel: 403-243-1079 Fax: 403-243-0546 http://www.isanderson.com
Cell: 403-860-5941 Email: [email protected]