Operational Forecasting, Capacity Planning
IBM Cognos TM1, Revelwood Lightspeed, Revelwood Dynamo!
This oil and gas company is in the mid-stream energy infrastructure business. Essentially, they gather various petroleum products, move them from the source,through the pipeline and to the destination of their customers—oil and gas providers. They handle all of the logistical services for managing, moving and storing the oil and gas.
With hundreds of pipelines throughout North America, the company needed to accurately project the flow of oil and gas. In the industry, this is referred to as movement. This information would support better customer analytics and revenue forecasting. Specifically, the company wanted to track two key metrics—volume by barrels per day and revenue dollars by pipeline (by type/grade of product, by customer and by month). For example, the company wanted to be able to forecast how many thousand barrels per day move from a port in Louisiana to a terminal in Sacramento. They also wanted to track, analyze and understand other operational data associated with the movement of petroleum products. These include contracted tariff rates and aggregate movement volumes. Lastly, they wanted the ability to adjust for inflation, overrides and other variables in order to fine-tune the forecast.
Separately, the company also wanted to be able to use operational performance management for capacity planning for terminal storage of oil and gas. The company’s customers have storage contracts for the petroleum products that are being transported. It is vital that the company understands how much spare capacity it has to store oil and gas products. They also wanted to be able to analyze tank utilization in order to be more efficient, and potentially, drive more revenue.
Revelwood turned to IBM Cognos TM1 and built cube models by pipeline. It models the type/grade of oil, the customer, the month, the product’s origin and destination, and other factors. The TM1-based solution now gives the company the ability to accurately forecast volumes of product transported, as well as revenue associated with that movement. The finance team has the ability to analyze their operations by pipeline, by movement and by customer, enabling the line of business managers and executives to make more strategic decisions around how, when, where from and where to, they transport the petroleum products. They also now have the ability to do capacity monitoring on their pipelines in order to prevent projected volumes that would exceed a pipeline’s capacity.
For the terminal storage capacity planning application, Revelwood built a three-tiered cube model which contains information on the maximum number of barrels each tank can store, contract information by tank number, customer contract type, leased volume and the rate the customer is paying to store the product.
Now, the company has much better visibility into its operations and can ask questions such as:
- Are my tanks fully utilized?
- When are customer contracts expiring?
- What contracts are up for renewal?
- Who are my biggest customers?
- What seasonal trends and fluctuations impact the storage of petroleum products?
Lastly, this TM1-based capacity planning model then feeds the relevant data to the financial model, which in turn provides vital operational information to support capital decision making around terminal expansion and other strategic initiatives.