LEADERSHIP for ENERGY AUTOMATED PROCESSING LEAP

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LEADERSHIP for ENERGY AUTOMATED PROCESSING
LEAP

• Presenter Michele A. Reynolds, Shell Trading US

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Who are WE?

• Our Mission
• To promote efficient and reliable transaction
  processing within the energy trading industry by
  means of automation and standardization. In
  connection therewith
• To pursue the automation of data processed
  between trading counterparties and companies that
  provide ancillary inspection, storage, pipeline
  movement, and related services.
• To promote simplifying business standards and
  practices.
• To develop and promote the use of non-proprietary
  electronic data standards, conventions and
  dictionaries, favoring industry standards over
  proprietary ones.
• To retain control wherever possible over such
  intellectual property, while making freely
  available to industry participants by means of
  licensing for use in accordance with the
  principles of this charter.
• To encourage cooperation among the energy trading
  parties and other industry participants/associatio
  ns towards achieving our mission. To encourage
  broad based participation in the association.
• To promote a robust competitive environment for
  our industrys product and service providers.
• To provide equal access to the standards for all
  members.

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Where we are today

• Trading companies utilize Trading Application Soft
  ware from vendors like Trade Capture, Triple
  Point Technologies, Sungard, Solarc, Open Link,
  Allergo, etc. or in-house developed solutions.
• These Trading Systems typically provide for
• Entry of Exchange and OTC Financial Physical
  trades
• Contract Generation
• Risk Management Market Credit
• Scheduling Waterborne, Pipeline, Land based
• Commercial Invoicing Prepayments, Provisional
  Billings, Finalizations Debit/Credit Notes
• Some degree of STP automation within the walls of
  the trading company
• These systems require
• The manual comparison of issued inbound
  counter-party contracts (excluding eConfirm and
  EFET) and invoices.
• The entry of quantities specifications of
  commodities received, stored delivered.
• The manual calculation of fees such as pipeline
  tariffs, ocean freight, etc. to insure accuracy.
• The maintenance of a myriad of data covering
  counter-parties, commodities, holiday calendars,
  fee structures, etc.

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Where we want to be

• Automated matching of repetitive and one off
  energy contracts including brokers.
• Automated collection of inspection, tank reports
  and pipeline tickets. Notification of receipts
  and entry of this data into the Trading System
  utilizing  XML documents.
• Automated matching of Commercial Invoices between
  parties (Including Physical Deals).
• Standardization of Broker Posted Price formats
• Computation of pipeline tariffs, ocean freight,
  etc. via services.
• Automation and standardization of data to
  facilitate Exchange and Truck and Bulk
  reconciliations
• In short, we want to extend the benefits of STP
  beyond the walls of our individual trading
  organizations

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How we get there

• Form an association with a steering committee.
• Development of collection distribution services
  which provide for
• The receipt of electronically transmitted
  Inspection and Tank Reports as XML Documents or
  direct entry via a hosted WEB site.
• The notification of received reports, e.g. email,
  IM.
• The publication of Inspection Tank Reports via
  XML Documents for direct entry into Trading
  Systems Logistic Systems utilized by Producers.
• Development of a pipeline tickets collection and
  common XML document distribution , ocean freight
  e.g, Dataloy, etc. computation services.
• Develop an inclusive commercial document matching
  service which provides for
• Matching commercial invoices starting with
  financial Invoices then physical invoices.
• Matching repetitive and one off OTC Contracts.
• Develop pipeline tariff, ocean freight e.g,
  Dataloy, etc. computation services.
• Develop alliances with established full service
  IT Energy Service Providers with similar
  functional technical expertise who directly
  benefit from the initiative and who will fund the
  above developments with a return on investment
  once established and profitable, utilize the
  services effect adoption of the services by
  their position in the industry.
• Once the above are established, utilize the
  relationships established and data collected in
  providing the matching services to develop Energy
  Data Services.

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Result WIN WIN - WIN

• User Companies
• Benefits of automation Greater capacity, reduced
  errors, earlier identification of claims, data
  mining of XML documents, dedication of staff to
  transaction processing. Resulting in a positive
  effect on the bottom line.
• Inspection Companies and Storage Providers
• Earlier payment for services, favored provider
  status, access to automation services
  billing, accounting, etc. resulting in a improved
  business posture.
• Service Providers
• New source of revenue, extension of the existing
  business model infrastructure expertise with a
  substantial upside and potential for other
  opportunities.

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LEAP Membership

• Target Members
• Leaders in Operations and IT from organizations
  engaged in the petroleum supply and trading
  business (may be broadened in the future to other
  energy trading).
• Membership Procedures
• Membership is open on a nondiscriminatory basis
  to energy trading entities (defined as crude oil,
  petroleum products, ethanol and possible power
  and natural gas).
• There would be two classes of membership
• Member all physical traders must be members
  pay full dues
• Associate Member any paper traders prohibited
  from physical trading under Fed. Reserve Reg. Y
  not exempt, may join as an associate member
  with reduced dues. Any associate member upon
  becoming a director must pay full dues.
• All members would have to be legal entities, not
  individuals.
• Members could be removed for misconduct, such as
  infringing the antitrust rules of the
  corporation.

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Current Participating Companies

• Arcadia
• BP
• BPN Paribas
• Chevron
• Conoco Phillips
• Glencore

• Hess
• J Aron
• Morgan Stanley
• Sempra
• Shell Trading
• Statoil

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Board of Directors2006-2007

• The board shall consist of up to nine
  representatives, with no more than one from any
  company. Directors would serve annual terms,
  with re-election permitted. The board shall
  elect a Chairman, Secretary and Treasurer from
  amongst the elected directors.
• The founding board members are
• Vlad Zeman, BP (Chairman)
• Vincent Loud, Sempra Energy Trading (Secretary)
• David Porter, Glencore (Treasurer)
• Michele Reynolds, Shell Trading US (Promotion)
• Thomas Krivas, Hess (Promotion)
• Kathi Benini, Goldman Sachs
• Kevin Jandora, Morgan Stanley
• Margaret Allen, Statoil

subject to pending internal member company
approvals.
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LEAP Committees

• Contract/Physical Matching Workstream Group
• The Colonial Pipeline project, which is the
  automated contract confirmation matching, is
  currently underway between Glencore and Morgan
  Stanley with use of ICE e-Confirm. XML schema and
  a Master Trading Agreement have been developed
  and circulated to LEAP members. The two parties
  electronic interfaces to eConfirm are currently
  in Beta release, with more members planning to
  interface in the coming months.

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LEAP Committees

• Commercial Documents/Certificate of QQ
  Workstream Group
• This work group is focused on the automation of
  inspection data and the need for developing
  standard XML format with CVX for nomination
  appointments (energy company to inspect company)
  and inspection results (inspect company to energy
  company). Invoice matching is outside the current
  objective at this time.

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LEAP Committees

• Physical Exchange/Imbalance Reconciliation
  Workstream Group
• This work group is focused on issues relating to
  large party exchanges and document flow
  inefficiencies and balancing problems. The
  go-forward plan is on seeking agreement on
  standards (with reference to PIDX) and specific
  work flow phases to include
• Phase I File format for base products
• Phase II HUB Construct.

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Previous Speakers at Meetings

• IECA - Liza Abad with IECA provided an overview
  of IECA as a resource IECA is an industrial
  credit association that provides credit reporting
  service for refiners and educational offerings to
  IECA members.
• PIDX - Gary D. Bevers of PIDX provided an
  overview of PIDX and explored ways that the two
  organizations might work together the Petroleum
  Industry Data Exchange, PIDX, is the American
  Petroleum Institutes (API) committee on Global
  Electronic Business Standards in the oil and gas
  industry.
• Tiegland-Hurt Assoc. LLP Lauren Teigland-Hunt
  discussed contract standardization issues and
  challenges in industry and conveyed her firms
  expertise in contract standardization.
• ICE e-Confirm Bruce Tupper with ICE eConfirm
  made a presentation on ICE e-Confirms existing
  capacity to provide electronic transaction
  processing services and ICE e-Confirms existing
  XML schema. Tupper emphasized need for Master
  Agreement to be in place to adopt electronic
  confirmations. Tupper reported on ICE e-
  Confirms current interface trading system,
  noting 95 match rate with 5 for reconciliation.

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Previous Speakers at Meetings

• Transport4 - Bill Sande with Transport4 made a
  presentation on Transport4s capacity to provide
  automation services to manage transaction
  document flow.
• Navarik - Bill Dobie with NAVARIK made a
  presentation on NAVARIKs capacity to provide
  automated CQQ document management support and
  provided a demonstration on NAVARIKs existing
  web-based automated services.
• Sunguard - Doug Wendler and Austin Morris with
  SUNGARD reported on their capacity to provide
  automated counterparty matching services.
• Global View ConfirmHub - Mike McSpedon et al. at
  Global View reported on their ConfirmHUB platform
  and their capacity to provide automated
  counterparty and broker matching services and
  also provided a demonstration on their Confirm
  HUB platform.

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Additional Info

• LEAPs Website COMING SOON
• We invite you to join us at our next meeting
• Tuesday, October 24th and Wednesday, October 25th
  
• Hilton Hotel, Canary Wharf, London
• For information Contact Maureen Beck at
  mabeck_at_sempratrading.com or 1 203-355-5321