E-COMMERCE STANDARDS:
A STRATEGIC IMPERATIVE
Ian Anderson
Electronic Commerce for Oil & Gas
London, January 28, 1999
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
25
<==Tight Control==>
<=Competition=>
20
15
10
8
<= Consumer TCF/YR
6
10
4
Wtd Avg US$/MCF =>
5
2
0
0
1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997
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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 Gas
Day
4:30 pm, Day before
Gas Day
9:00 am
Not
Applicable
Evening
6:00 pm, Day before Gas
Day
10:00 pm, Day before
Gas 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.
January 28, 1999
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Q&A
Questions?
January 28, 1999
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E-COMMERCE STANDARDS:
A STRATEGIC IMPERATIVE
Ian Anderson
Principal 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: ian@isanderson.com