This presentation discusses how prescriptive analytics can help energy traders, originators, portfolio managers and risk managers make faster, accurate decisions in the most complex scenarios

1. Energy Trading and Prescriptive Analytics
Chris McManaman
March 2017
Its nice to know the destination. Its awesome to
know the best route to get there.

2. Agenda
Challenges in Energy Trading and Supply Chain Optimization
Why is Prescriptive Analytics such a great solution?
How does Prescriptive Analytics work?

3. Challenges in developing
energy supply chain solutions
Solutions to complex
problems
Partnerships and
Acquisitions
Collaboration among
business functions
Risk Management Preparing for the future

4. The Excel Supply Chain Optimization Solution
Each asset on the supply chain is optimized using siloed spreadsheets, Access or one
off applications

5. The Excel Supply Chain Optimization Solution
The ability to simulate or optimize a solution across the entire energy supply chain which would include
input from both trading and operational models requires the compilations of many spreadsheets into a
super massive spreadsheet.
The effort required to develop this massive spreadsheet outweighs the value that the spreadsheet provides
because of the time its takes and the number of adjustments and assumptions required to merge all the
data

6. Data required to optimize an energy supply chain can
get overwhelming…

7. Agenda
Energy Trading and Supply Chain Optimization
Why is Prescriptive Analytics such a great solution?
How does Prescriptive Analytics work?

8. The benefits of 5th Generation Prescriptive Analytics
Software
• Drag
• Drop
• Configure
• Integrate
• Run
*notice the absence of the words: develop, compile, debug or
the name of any programming language..

9. Energy trading supply chain analysts can stop
building code to model and optimize scenarios…

10. …With this
• Each icon is drag and droppable
• Each icon is configurable to set up constraints and variables
• Each icon can import data

11. Integration of data and report generation
PnL Report
Income Statement
Balance Sheet
MtM Report
Credit Exposure Report
ETRM ERP DWExcel/AccessMarket Data
Prescriptive Analytic Software

12. Prescriptive Analytics optimizes decision making
Descriptive Diagnostic Predictive Prescriptive
Information Optimization
Hindsight Insight Foresight
Purchased Below normal
temperature
Purchase
Forecasts
Purchase supply
based on forecast

13. Prescriptive Analytics
Introducing GPS capabilities to your trading, supply and origination capabilities

14. Descriptive Analytics
You ended up here
Hindsight + Information

15. Diagnostic Analytics
You were here
You ended up here
This is why you ended up at your destination
Hindsight + Information

16. Predictive Analytics
You need to be
here
Foresight + Information

17. Prescriptive Analytics
You are here
You need to be
here
This is the best path to get to your objective
Foresight + Optimization

18. Two ways that prescriptive analytics can provide GPS capabilities
Optimization Simulation
Operational Strategic
Balance exposure across industries
Managing natural gas storage
Increase revenue
Determine optimal pipeline route
Purchase additional capacity
Enter new markets
Change pricing index
Divest assets

19. Sophistication of intelligence
Competitive Advantage
Low market penetration

20. Agenda
Challenges in Energy Trading and Supply Chain Optimization
Why is Prescriptive Analytics such a great solution?
How does Prescriptive Analytics work?

21. Objectives
The three key elements used to determine the optimal solution
Decision
variables
MaximizeGeneratesConstraintsData
Pipeline capacity
Injection and withdrawal rates
Pipeline routes
Accounts receivable
Credit exposure
Accounts payable
Maximize net income
Hedge 20% of production
Minimize credit exposure

22. Developing the Optimization Model
What are we trying to
optimize?
On what factors will we base our
decisions?
What determines the most
optimal solution?
What constraints must be
honored to be accepted as a
feasible solution?
Identify decision
variables
Define objectives
Itemize
constraints
Understand
problem

23. Data Decision VariablesConstraints
Prescriptive analytics is easy to implement
Maximize Net
Profit
Purchase Price
and Volumes
Production
costs
Crude
transportation
routes
Prescriptive analytic optimization models combine:
Objectives
Tariffs and
Volumes
Pipeline costs
Pipeline
capacity
Fees and
Volumes
Trucking costs
Trucking
capacity
Sales Price and
Volumes
Sales ValueCredit limit

24. How to get started?
Prescriptive Analytics Workshop
1 day in depth workshop on prescriptive analytics for
a comprehensive discussion on prescriptive analytics
Prescriptive Analytics Training
5 day training on prescriptive analytics so your
company can get hands on experience with
prescriptive analytics
Prescriptive Analytics Assessment
2 weeks assessment of how prescriptive analytics can
be applied to your company to improve net income
Prescriptive Analytics Proof of Concept
4-6 week proof of concept to demonstrate how
prescriptive analytics can speed up decision making
and improve revenue and reduce costs

25. Energy Trading and Supply Chain Analytics
https://www.linkedin.com/in/cmcmanaman/