As Europe is going through an unprecedented financial and economic crisis, the oil and gas industry continues to face an uncertain business environment. Another recession could lead to reduced demand and further increase the pressure on margins in downstream operations. This has suppliers and buyers looking to exploit any operational efficiency they can. Terminal operators play a critical role in helping suppliers and buyers achieve those efficiencies, and can benefit their own operations while doing so. To gain a competitive edge, terminal operators need to be mindful of the big trends in the industry and make sure that their Terminal Automation System (TAS) is capable of supporting state-of-the-art supply management systems that suppliers intend to use in order to maximize their efficiency. And for most TAS, a simple configuration change is all it takes to achieve this.

1. Europe’s Window of Opportunity
for Terminal Operators
Downstream industry trends bring new real-time supply
management systems to the European market
December 2012 / White Paper
Make the most of your energy SM

2. Summary
Introduction ............................................................................................... p 1
Industry changes usher in new norms........................................................ p 3
.
Window of opportunity............................................................................... p 4
Integration with a simple, yet cutting-edge TAS configuration ..................... p 6
Multi-Nationals are driving the trend towards real-time supply
management in Europe ............................................................................. p 7
Conclusion ................................................................................................ p 8

3. Europe’s Window of Opportunity for Terminal Operators
Introduction
by Scott Fleck*, Chief Strategy and Technology Officer at Schneider Electric
As Europe is going through an unprecedented financial and economic crisis, Downstream industry trends are
bringing new real-time supply
the oil and gas industry continues to face an uncertain business environment.
management systems to the
Another recession could lead to reduced demand and further increase the
European market. Early adoption by
pressure on margins in downstream operations. This has suppliers and buyers terminal operators puts them on the
looking to exploit any operational efficiency they can. leading edge and offers the chance
to attract the business of major
Terminal operators play a critical role in helping suppliers and buyers achieve suppliers and buyers.
those efficiencies, and can benefit their own operations while doing so. To gain
a competitive edge, terminal operators need to be mindful of the big trends
in the industry and make sure that their Terminal Automation System (TAS)
is capable of supporting state-of-the-art supply management systems that
suppliers intend to use in order to maximize their efficiency. And for most TAS,
a simple configuration change is all it takes to achieve this.
* Article published in the March 2012 edition of Tank Storage
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4. Industry changes usher
in new norms

5. Europe’s Window of Opportunity for Terminal Operators
Industry changes usher
in new norms
Trends across all industries indicate that in order
to be successful in today’s markets, companies
need real-time access to the critical information
that affect their operations. For the downstream
oil and gas industry, the need for rapidly delivered
information has increased due to the complexity
and higher pace of energy trading, higher cost of
capital for fuel in tanks, and also because of recent
shifts in the ownership structure of terminals. In the United States, suppliers have been able to
overcome these challenges by partnering with
Over the past few years, large oil companies in the terminal operators to implement integrated supply
United States and Europe have been reevaluating management systems that plug in to the operators’
their portfolios and divesting non-core industrial TAS. These services have evolved over time to
assets. While in Europe non-proprietary terminals meet the changing needs of the industry – from the
have been the norm for quite some time, in the first systems developed in the 1980’s that issued
United States major suppliers have increasingly sold electronic Bills of Lading (BOL) at the rack, to
off proprietary terminals in favor of utilizing outside today’s solutions which include allocation and
supply points (OSPs) in order to secure savings in credit control features and instantly transmit BOLs
operational and overhead costs. to the necessary parties.
Unfortunately, distribution from OSPs also creates Before the development of these solutions, it would
the vast logistical challenge of coordinating have been an impractical decision to develop
fuel supply at hundreds of individually operated a network of third party terminals for product
terminals, creating significant difficulties in tracking distribution, despite any cost savings from divesting
product allocations and providing accurate, in distribution infrastructure. Now, suppliers are
timely billing. able to take full advantage of the cost-effectiveness
of distributing from OSPs while maintaining the
billing and supply management efficiencies of a
proprietary distribution network.
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6. Europe’s Window of Opportunity for Terminal Operators
Window of opportunity
for terminals
For terminal operators, recognizing these trends
and embracing the technology offers an open
window of opportunity. By configuring their TAS to
interface with suppliers’ fuel supply management
systems, terminal operators can help their
suppliers implement a simple solution to better
streamline business processes and overcome
market challenges. In doing so, they become
preferred partners to the most advanced suppliers
in the industry by offering them the ability to
consolidate fuel supply management and to take
advantage of the most efficient billing procedures. This trend is particularly relevant for Europe,
where many different systems are used to move
Benefits of BOLs between parties, leading to the loss of
valuable time and accuracy when BOLs have
Standardization to be translated from one format to another. An
One of the biggest issues suppliers and their increased adoption of real-time BOLs would
customers face is the widely differing formats establish a single consistent framework for
and speeds with which BOLs may be generated communication and establish an open industry-
and processed across a network of OSPs. While standard format. Updates to the PIDX standards
they can be captured electronically from third are currently being finalized to account for
party terminals, formats do not always follow an European data needs and existing country-
industry-standard and often vary dramatically by-country standards to provide one common
across communication platforms. These solution for the whole European
inefficiencies can cause cash-flow issues, high downstream industry.
labor costs of handling exceptions, and delayed
supply and billing information. PIDX, originally part of the American Petroleum
Institute (API), has been an established standards
Supply management solutions offer BOL data body for over 25 years. PIDX is now an
within seconds of load completion via the independent international standards organization
terminal’s TAS system, allowing for timely and supported by the membership of companies from
accurate billing that is beneficial to both the the industry such as BP, Chevron, ConocoPhillips,
supplier and the buyer. These systems also and Shell as well as industry vendors. Workgroups
provide master data management features are established that utilize volunteer efforts to work
that allow direct integration to the supplier’s cooperatively on the common needs of all parties
ERP system to streamline setup and change involved. The European Downstream Workgroup,
management. In addition, they provide BOL established 18 months ago, has been focused on
standardization across the terminal network these initiatives with efforts from companies such
through the use of Petroleum Industry Data as Shell, BP, Schneider Electric, and others,
Exchange (PIDX) protocols. Terminals that but participation in PIDX is open to all
can accommodate these solutions offer a industry members.
clear advantage to suppliers, and with a PIDX
compatible TAS they can support nearly all fuel
supply management systems, regardless
of vendor.
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7. Europe’s Window of Opportunity for Terminal Operators
Window of opportunity
for terminals
Effective supply affects their own supply levels and decisions about
trucking logistics. If supplies are tight, if a buyer
management for has maxed out his product allocations without
suppliers knowing it, or even if some outside disturbance is
disrupting supply at a terminal, trucks may be sent
Disruptions in product supply hurt the bottom there only to be denied loading privileges, a costly
line no matter where one falls in the downstream trip that must then be repeated at another terminal
industry. At the intersection of a multitude of where product can be lifted.
suppliers and buyers with complex and often
widely differing ways of doing business, a terminal When suppliers partner with terminal operators
is a critical piece of the supply network. If suppliers to use fuel supply management systems, they
have difficulty forecasting demand, accurately can provide customers with the ability to see
tracking supply levels and altering allocation and when supply is tight or when their allocations are
credit limits at a terminal, they will be ineffective in approaching limits via online tools. Suppliers are
managing customer demand and terminals may able to communicate with buyers and keep them
find themselves with tight or depleted fuel stores. accurately informed about which products are
These inefficiencies at the terminal cut into the available for them, at which terminal, at any given
margins of all parties involved. time. By checking their status at a terminal before
sending trucks, buyers avoid unnecessary failed
The broad-based adoption by suppliers and loads and protect their margins in a
terminals in the U.S. of supply management volatile market.
solutions has largely mitigated these issues.
Systems, such as Schneider Electric’s TABS, The tools and abilities offered by fuel supply
one of the most widely installed solutions, offer management systems trickle throughout the
real-time insights into rack demand to help industry and help foster beneficial relationships
suppliers proactively manage supply for contract between all nodes. The efficiencies provided
commitments, measure traffic at exchange to suppliers improve the quality of service they
terminals and ensure that each buyer receives are able to deliver to their buyers, which in turn
his allocated nomination. Credit and volume solidifies continued business for the supplier. As
control systems automatically authorize or alert a a key element in the business cycle, terminal
customer who may otherwise accidentally exceed operators are an essential partner in implementing
their limits, which reduces the risk of credit losses these new trends and receive their own benefit as
and inventory runs, as well as ensures that each the preferred location to do business.
party receives their fair volumes.
Conversely, terminals that do not keep up leave
Terminals central the suppliers with difficult decisions about
to relationship
whether they want to continue doing business
“the old way.” In the United States, the answer
between suppliers has been a resounding “no,” with nearly every
terminal integrating their TAS with suppliers’ fuel
and buyers management systems.
Buyers are just as concerned about terminal fuel
supply management as suppliers, as it greatly
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8. Europe’s Window of Opportunity for Terminal Operators
Integration with a simple, yet
cutting-edge TAS configuration
Fortunately, most terminal operators do not need
to invest any capital to integrate with a supply
management system – they can benefit from all of
its advantages simply by allowing their TAS to be
configured to interface with the supplier’s system
either via the web or via another secure connection.
Once completed, the TAS is ready to integrate with
that specific supplier’s supply management system,
in addition to most other available systems, as they
are relatively compatible with the majority of TAS.
As an example, DTN TABS is not only compatible
with Schneider Electric’s Guardian3 terminal
automation service, but with any TAS that is PIDX
compatible with a few mouse-clicks. In addition,
Schneider Electric places a premium on creating
industry compatibility and works with terminal
operators and TAS vendors to accommodate non-
PIDX standards, transparently converting to PIDX
standards allowing all other parties involved to only
have one protocol and interface to support.
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9. Europe’s Window of Opportunity for Terminal Operators
Multi-Nationals are driving the trend towards
real-time supply management in Europe
While the picture in Europe is slightly different
compared to the United States, it faces many
of the same challenges suppliers and terminals
have been working to overcome in America.
Infrastructure and standards vary from country
to country. Certain countries operate primarily
on pre-order purchases, others primarily on rack
purchases. The protocols for issuing BOLs and
supply management differ from one country to the
next and a majority of terminals are not equipped
to provide real-time information.
Suppliers are aware of these challenges and due
to the successful implementations in the United
States, real-time information systems and their
many advantages are primed to become the new
standard for doing business in Europe. In addition
to all the benefits provided by being able to react
to changes quickly and in real-time, deploying
these systems will provide an opportunity
to standardize the industry and establish a
normalized format for BOLs.
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10. Europe’s Window of Opportunity for Terminal Operators
Conclusion
A primary service provider to suppliers in the United States, Schneider Electric
has observed the emergence of this trend, as the multi-national companies
currently utilizing DTN TABS have begun expressing interest in also being able
to use this service for their operations in Europe and the rest of the world.
However, even though large multi-national players are leading the charge,
supply management solutions benefit suppliers of all sizes and will eventually
become the new industry standard – over 95 percent of US terminals
currently integrate with supply management solutions provided by
Schneider Electric and other integrated supply management solutions.
While market pressures will eventually necessitate the integration of
automation systems with suppliers’ fuel supply management systems,
terminal operators that support the implementation of these services can
enter at the ground level and capitalize on adopting solutions that suppliers
increasingly require but few European terminals currently offer.
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11. ©2012 Schneider Electric. All rights reserved.
Schneider Electric USA, Inc.
9110 West Dodge Road
Omaha NE 68114
Tel: 800-610-0777
Fax: 402-255-8125
www.schneider-electric.com/us
December 2012