Case Study: Going digitalby Arabian Oil & Gas Staff on Dec 21, 2016
The level of uncertainty that defines – and will continue to define - energy markets in the near term should banish any complacency around trends that dominated during normal conditions. Petrochemical producers need to prepare for both today’s challenges and those to come by adopting the best available risk management tools.
Take the case of the Dow Chemical Company, a global Fortune 50 petrochemical company combining the power of science and technology to innovate what is essential to human progress.
The company is driving innovations that extract value from the intersection of chemical, physical and biological sciences to help address many of the world’s most challenging problems, such as the need for clean water, clean energy generation and conservation, and increasing agricultural productivity.
Dow’s integrated, market-driven, industry-leading portfolio of specialty chemical, advanced materials, agro sciences and plastics delivers a broad range of technology-based products and solutions. Back in 1997 Dow Chemical selected a commodity trading and risk management (CTRM) system from Allegro Development to increase visibility into daily risk and to react to change more promptly. More recently, the company undertook a comprehensive upgrade of the Allegro system to the latest version of the software.
With the help of system integrator capSpire, the upgrade moved Dow’s hydrocarbons and energy business, including their US and Canadian natural gas, US and European feedstocks, and global risk group, from the legacy to the new platform in under eight months, significantly improving the company’s P&L reporting capabilities.
A short delivery timeframe and large project scope made the transition a challenge, but close collaboration between the software provider and integrator, along with a proven implementation toolkit employed on the case, enabled Dow to accomplish its objectives.
Dow’s hydrocarbons and energy business has long been a world leader in the production of crude oil and styrene. It is responsible for the procurement of fuels and crude oil-based raw materials, and supplying products and power for use in the company’s global operations.
Hydrocarbons and energy also purchase natural gas liquid feedstocks to produce products such as butadiene, styrene, ethylene, propylene, power and steam.
Dow needed to manage the risk of the natural gas and natural gas liquids commodities, since the purchases of these products directly impact its profitability.
Prior to 1997, the business was executing its risk management function with multiple spreadsheets to monitor pricing, trading, transactions and risk management. Reliance on spreadsheets was limiting visibility into the daily risks affecting its portfolio, as well as its ability to react and adapt to changes quickly. Dow needed to replace spreadsheets with a state-of-the-industry trading, transaction and risk management system that could manage their highly complex operations, including global transportation of raw material and risk management strategies.