Oil ITJ—What does Aspen do?
Bartel—Aspen Technology is an end-to-end downstream software vendor covering supply, trading and distribution of liquids including crude, intermediate feed stocks and finished product. Users of our software include traders and logistics workers in majors, national oil companies, and intermediaries. PetroVantage, our flagship product, helps all these people make the best decisions on hydrocarbon trading.
Oil ITJ—It sounds like securities trading on Wall Street?
Bartel—Yes and no. It is quite common to see traders and logistics people in the same room shouting a lot! But the reality is that trading physical commodities is a much more complex operation than securities or other ‘dematerialized’ trades. This is a very physical business involving transportation, many different players—terminal operators, networks of pipes and barges spread across the country if not the world. We trade in real liquids with many different characteristics—not a commoditized trade in ‘Brent crude’. Each such grade of crude (of which there are hundreds) has a different value at different times and for different refineries. The trick is to match the right crude to the right market— something which has become very complex in last decade or so. Today there are well over 50 grades of gas in the US market alone—with different specifications for California, Chicago and Houston—which may change through the year. The US also imports up to 2 million barrels per day of product (not crude) which may have different foreign specifications and may need tweaking to suit local markets. So the decision to buy a European cargo of product may imply other decisions as to how it will be blended into a product for the US market. In the old days, all this was done over the phone—and by consulting a 3 inch thick book of specifications. Now pipeline tariffs and a host of other relevant data are online. All of which must be matched with the logistics of refinery requirements—they need to have room in the tanks when the product starts flowing!
Oil ITJ— The whole process sounds incredibly complicated—how do traders ever reach a decision?
Bartel—They are professionals with years of experience who know their markets. Of course, software helps. We offer linear programming tools to optimize the mix to market. Citgo for instance (see next page) configures cases which are run every morning to include overnight developments.
Oil ITJ—What does the software do?
Bartel—PetroVantage provides decision support and analysis. Databases show the conformance of a crude’s specifications with different marketplaces. Logistics can be rolled into the computation, calculating the cost of shipping by different routes. With work process coordination traders can respond to opportunities and events—such as shipping delays, ‘spurious’ events and emergencies. The software helps companies reduce operating costs by reducing demurrage (standby) charges and minimizing operating risks.
Oil ITJ—Why did Citgo chose PetroVantage?
Bartel—Citgo, which is owned by PDVSA, is one of the larger integrated downstream traders and refinery operators. It moves 1 million bbl. per day around its 7 refineries. Early adopters were in Citgo’s finished product trading team - the crude traders joined in later. Actually, this is the first enterprise-deal for PetroVantage, although we already have 11 corporate clients and around 100 licensed users.
Oil ITJ—How is your software deployed?
Bartel—PetroVantage is web-based and currently is hosted at our data center. This situation will likely evolve depending on client requirements. The software is delivered through ‘role-based consoles’—one for the trading team, another for logistic support and one for third party refinery scheduling.
Oil ITJ— Are the trades concluded electronically?
Bartel—Actually no. Trades are still usually concluded over the phone. We also offer support for email and instant messaging from within PetroVantage. The software is primarily focused on decision support rather than e-business, and provides online news, weather and data feeds within the workflow tools. B2B may happen in the future.
Oil ITJ—It sounds as though you have a massive data entry and maintenance program going on in the background.
Bartel—Well, we leverage as much online data as we can—with feeds from Platts and Nymex—we also integrate with corporate spreadsheets of price forecasts and other enterprise data. Refinery and pipe data can be entered through our consoles and integration with SAP or other Aspen products is also possible.
Oil ITJ—How big a market is this? Is speed important?
Bartel—Let me put it this way, geologists do a great job of finding oil—but it is usually neither in the right place nor of the right composition! Generally around 2½ barrels of physical oil are traded to make one barrel of refined product as liquids are re-blended and tailored to the market in various swaps and deals. Companies will typically have a portfolio of contracts—perhaps 50% long term and 50% short term allowing for flexibility and reaction to markets and opportunities. Crude tends to be a longer term deal. But there is constant tweaking as dock strikes, storms and opportunities come along.
© Oil IT Journal - all rights reserved.