Managing midstream businesses given fluctuating commodity pricing, contractual terms, and processing conditions requires an integrated view of the midstream enterprise spanning gathering and processing assets. eSimulation provides a comprehensive Midstream Modeling and Optimization Platform that allows midstream executives to manage these fluctuations, optimize supersystem assets, and combine supersystem models for enterprise-wide optimization.
This is enabled by the sophisticated computational, database management, physical modeling, commercial modeling, and large-scale equation solving capabilities contained within the following software applications:
The Midstream Modeling and Optimization Platform provides management with the ability to optimize trade-offs and margin positions across the midstream value chain:
- Reduce the uncertainty of predicting future business performance
- Understand the sensitivity associated with a range of possible outcomes for those items that can’t be predicted accurately (prices and volumes)
- Run what-if scenarios to examine the impact of adding new gas or new equipment on overall profitability
- Optimize business performance to maximize profitability on a daily basis
- Run detailed variance analyses to identify and correct items that can be controlled
eSimulation has witnessed strong findings by using the Midstream Modeling and Optimization Platform to identify and evaluate profit opportunities.
- A $250,000/month value opportunity was realized from identifying – and allowing the midstream company to mitigate – an issue resulting from a processor election option.
- $500,000 – $1.0 million/month was realized during the summer and fall period by allowing managers to identify a pricing anomaly and to proactively adjust their hedging strategy to mitigate the problem.
- $300,000 was realized by identifying a settlement issue whereby the producer was under billed $500,000 over previous 3 year period. Processor used the lookback capability of the eSimEvauator business model to make their case and negotiated a $300,000 reimbursement payment.
Intangible benefits have also been documented:
- Increased Forecast Accuracy – Supports questions from management, BOD, and financial community
- Support Funding Transactions – Supports business growth and new opportunities by developing credible pro forma and associated sensitivity calculations. Sensitivity analyses run considering various changes in commercial and operating assumptions to assess EBITDA and risk impact.
- Increase Loss Factor Accuracy Across Gathering System – Identify and quantify losses on a component-level basis for each meter. More accurate planning and forecasting by considering losses in simulation case runs.
- Evaluate Prospective Gas Supply Contracts – Increase competitiveness from a more accurate estimate of margins under various assumptions. Consider new gas impact on complete gathering and processing system. Consider impact on compression, treating, and processing infrastructure. Examine accretion of the contract by contract type. “eSimEvaluator forces us to consider all interactions”
- Eliminate Spreadsheet Risks and Inefficiencies – Spreadsheets are not free; multiple groups using disparate spreadsheets – often overly simplified – requires building and maintaining multiple spreadsheet tools. Replaces multiple, standalone spreadsheets, such as forecasting, gas supply, accrual, planning and budgeting with a comprehensive business model. Supports lookback analyses and provides an audit trail.
- Reduce Effort for Variance Analysis – Dramatically reduce the effort to generate accurate variance analysis. Easily evaluate price & volume variations and their impact on gross margin. Quantify the opportunity for more effective management of other business drivers to improve profitability.