As energy companies seek to become more efficient and agile in a rapidly changing marketplace fraught with risks, digitalization - the process of evolving from manual or analog processes to more efficient and cost effective digital processes by reducing the number of times data is touched and ensuring greater accuracy and more rapid movement of data and information throughout the enterprise – continues to attract attention from CIOs across the energy value chain.

1. ACHIEVING DIGITALIZATION
IN A DOCUMENT INTENSIVE
ENERGY MARKET
WHITE PAPER
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2. Achieving Digitalization in a Document Intensive Energy Market A ComTechAdvisory Whitepaper
INTRODUCTION
As energy companies seek to become more efficient and agile in a rapidly changing marketplace
fraught with risks, digitalization - the process of evolving from manual or analog processes
to more efficient and cost effective digital processes by reducing the number of times data
is touched and ensuring greater accuracy and more rapid movement of data and information
throughout the enterprise – continues to attract attention from CIOs across the energy value
chain. Unfortunately, many of the digitalization efforts by energy firms to date have met with
mixed results as much of the data in this industry, and particularly that passed between trading
and/or service partners, is not available in a form that allows rapid capture and systematic
integration, particularly that data that exchanged in the form of paper documents, pdf’s, faxes
and emails.
Though many of the processes of energy and
commodity trading have become digitalized (exchange
based trading, electronic pipeline nominations/
EDI, ISO interfaces, etc.), the reality is that in many
ways the wholesale energy markets lag behind many
others as manual processes and massive number of
documents (both physical and electronically delivered)
still exchanged among industry participants. These
documents include:
• Invoices
• Energy services or trading contracts
• Broker statements
• Pipeline statements including EOM reports, cut
reports and notifications
• Metals inventory reports and statements
• Truck tickets
• Vessel (ship and barge) nominations
• Inspection reports
• Complex, non-standard confirmations
• Trade finance documentation including LC’s
• And many more….
In addition to documents exchanged between parties
to any transaction, many shops also continue to rely on
manual paper-based processes internally – including
deal sheets and printed reports. Each time a document
is passed between companies, human interpretation
and manual keying of that information into one or more
systems is required, with the attendant costs and risks
of introducing errors during the process.
• Physical and electronic documents
continue to create friction on the path
toward digitalization for energy trading
firms.
• Advanced AI and OCR technologies,
such as that from Aquilon, can enable
firms to quickly consume and reconcile
document-based data and reduce or
eliminate manual tasks and rework in
energy trading back offices.
• Aquilon’s lightweight tools can achieve
these benefits with no complex system
integration or change of processes
required.

3. Why do these paper-based process continue to persist
when even a cursory look at available technologies tells
one that many could be replaced via modern web/
cloud enabled document management and workflow
solutions, combined with relatively straight-forward
business process changes?
Perhaps one of the most compelling reasons to
continue to use paper-based processes is control. This
is particularly true in those instances where there is a
vested financial interest in ensuring the accuracy of not
only the transactional records, but also the terms and
conditions underlying the transactions. For example,
natural gas processing agreements can have highly
customized terms and pricing arrangements that are
difficult to model accurately even in a customized ETRM
system, much less a non-industry specific document
management and workflow solution.
Other contracts, such as trade finance agreements
have any number of covenants that may be written
specifically to the financial characteristics of a single
firm and require multiple levels of auditable review
and analysis prior to being issued. Additionally, much
of the current legal system is based on written legal
agreementsamongtwoormoreparties.Thoughdigitally
executed agreements are now commonplace, a paper-
based contract document is still generally considered
necessary to spell out the terms and conditions of the
agreement.
Setting aside contacts and similar agreements, the
primary reason document or paper-based transactions
persist appears to be simply the costs of adopting
alternative processes and solutions. In essence, the
question is “Is there a compelling reason to invest in
replacing a paper-based process with a new processes
and software?” In most cases such a replacement
solution would entail one or more new software systems
to record, manage workflows and track the new digital
forms, including requisite security controls. On the
surface, it would appear difficult to justify that scale of
investment, particularly for entrenched processes and
those in which errors could result in significant financial
exposures.
As previously mentioned, the energy markets are
a good example of how this friction has slowed the
adoption of fully digital processes. Even as exchange
based trading, power market automation and pipeline
EDI solutions have penetrated this market over the last
25 years, most if not all market participants still employ
inefficient document-centric processes that require
significant human effort, including, but not limited to,
settlements/invoicing, pipeline reconciliation, and
deal confirmations. These processes require dozens or
if not hundreds of manhours of effort each month to
review, input and reconcile the document data against
that in internal systems. Pipeline statements alone can
be dozens of pages in length and reconciling monthly
volumes can require labor intensive matching of daily or
intraday volumes against those recorded in an ETRM
system to identify discrepancies.
Though it is difficult to quantify the full benefit
of becoming a more digital-enabled business by
eliminating or otherwise automating these document-
centric processes, the ability to capture the “low-
hanging fruit” such as pipeline reconciliation will clearly
recoup dozens if not hundreds of man-hours each
month for natural gas trading companies.
Unfortunately, becoming a digital organization isn’t
Achieving Digitalization in a Document Intensive Energy Market A ComTechAdvisory Whitepaper

4. Achieving Digitalization in a Document Intensive Energy Market A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved.
LEVERAGING NEW TECHNOLOGIES
Though optical character recognition (OCR) solutions have been around for more than a decade,
simply converting text to data, even if done with 100% accuracy, provides little benefit beyond
enabling the user to manually parse, categorize or store the information in a database, and in a
format that can be used by other applications. Unfortunately, OCR programs by themselves do
not provide contextualization of data; rather they require the software user to understand or to
make judgements regarding the nature of that data and how it might be used.
4
However, advances in artificial intelligence (AI) and
machine learning (ML) over the last several years
have enabled the development of new solutions
to address this shortcoming with traditional OCR
solutions. Utilizing pattern recognition technologies,
these systems are being used with good effect in some
markets and industries, such as the medical industry
for converting traditional medical records to e-records;
in banking for reading data from check images to speed
payments processing and eliminate man-handling of
paper checks; or in various levels of government for
capturing, managing and archiving records. However,
the scale and costs of the effort to code and deploy
these AI-powered solutions had limited their adoption
in markets with more limited economies of scale.
Now, with the broader use of AI and ML, and the
continuing advancement in supporting technologies,
costs have fallen, and these solutions are now being
increasingly adopted, and adapted, for use in the
energy markets.
as simple as mandating that your trading partners or
service providers adhere to your vision of a new way
of working…that is demanding that they move to a
fully digital communications and exchange all digital
information when conducting business with your
organization. Few if any companies have the leverage
to mandate such changes. Nor is it about making
wholesale changes to your critical systems, such as
your ETRM solution, to accept new data formats, or
developing complex integration strategies and systems
that ultimately rely on constant updates or human
intervention as electronic document formats change.

5. Achieving Digitalization in a Document Intensive Energy Market A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved.
A NEW APPROACH FOR MANAGING
DOCUMENT DATA
Aquilon Inc. has leveraged these advances in technology to develop the Aquilon Network - a
cloud-based platform that automates bilateral settlements in the wholesale natural gas and
power markets. Using the Aquilon platform, more than 1000 companies have been able to
more efficiently settle their trading transactions by securely exchanging invoices, exporting and
comparing settlement details, and better communicate to resolve variances…all while capturing a
full settlement audit trail. This rapid settlement capability is enabled by an advanced AI matching
engine that reads and contextualizes transaction data and supporting information contained
within each invoice document.
With its proven success in energy settlements, Aquilon
has expanded its reach to address other inefficient
document-based processes in the energy markets,
allowing energy market participants to overcome many
the most difficult roadblocks that every company faces
when trying to become a more digital enterprise.
Regardless of the document type, Aquilon’s new
platform, called CARLI (for Capture, Automate,
Reconcile, Learn, Inform) can synthesize the report/
document data into a single spreadsheet view; and
then, using their AI-powered matching engine, match
that data with source data from any number of systems,
including ETRM, ERP or other databases, to identify
variances in real-time. Using CARLI enables customers
to optimize back office reconciliations of any type and
achieve many of the benefits of digitalization, including:
• Increased operational efficiency
• Reduced costs of reconciliation and reconciliation
errors
• Improved data standardization
• Enablement of common analytics
CARLI is a proven technology platform that has been
deployed to address a number of common issues that
arise when companies are faced with reconciling data
in their internal systems (particularly ETRM systems)
against documents provided by counterparties. These
use cases include:
5

6. Achieving Digitalization in a Document Intensive Energy Market A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved. 6
• A large multinational bank trading natural gas
was unable to electronically match data provided
in pipeline park-and-loan agreements against
the records contained in their ETRM system as
the formats of those agreements didn’t align with
that ETRM system’s requirements. Using CARLI,
the park-and-loan agreements were digitalized
and via a quick mapping to the ETRM system
data, the customer was able to quickly match and
reconcile. And, with each new revision or statement
associated with those park and loan agreements,
CARLI, utilizing its native AI matching capabilities,
was able to quickly recognize changes and
provide updated reconciliation statements for that
customer, saving hours of man effort compared to
what was previously required.
• Another banking customer was having difficulty
managing the various metals trading reports
they were receiving from their counterparties,
exchanges, and inventory warehouses. These
documents included inventory statements,
movement tracking and assay/quality certificates.
Using CARLI’s web native architecture, Aquilon was
able to rapidly template the documents and enable
to the customer to quickly reconcile each of these
various physical metals reports and documents
against the data held in their internal systems. After
a brief implementation, the customer was able to
shave hours of effort from their daily and monthly
reconciliation efforts.
• Aquilon is working with several natural gas trading
and marketing firms to expedite their monthly
pipeline settlements processes by digitalizing the
various pipeline statements they receive each
month. Using CARLI’s web-based platform and
advanced AI-enabled matching engine, these
companies have been able to quickly reconcile
those statements to the data held in their ETRM
solutions, identifying and solving differences, and
ensuring high levels of accuracy…all accomplished
without the need to enhance or otherwise change
their existing ETRM solution.
As a cloud delivered platform, security is at the forefront
of the Aquilon Network and CARLI. Operating from a
SOC 1 compliant facility and hosted in Azure, all data
into and out of the Aquilon Network is fully encrypted
and has met the most strenuous requirements of the
leading commodity banks with which Aquilon works.

7. Achieving Digitalization in a Document Intensive Energy Market A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved. 8
SUMMARY
As energy and commodity producers, traders and
marketers seek to improve efficiency, become more
agile and improve bottom-line performance through
a digitalization strategy, the continued passing of
documents in these markets, both physical and
electronic, creates roadblocks to achieving those
goals as these documents require hours of manual
interpretation and reconciliation - along with the
attendant risk of errors.
Unfortunately, there is little that can be done to
eliminate these documents from your business’ day-to-
day activities; however, accelerating the management
of these documents and ensuring accuracy in reading
and reconciling the data contained within them can
move your organization much closer to becoming a fully
digitalized business. Equally important, using the latest
web technologies and AI such as those available from
Aquilon and the CARLI platform, these benefits can be
achieved without costly implementations of complex
software or changes to your critical systems, such as
your ETRM solution.

8. Aquilon Energy Services is a technology company
and developer of the first collaborative, cloud-based
platform to automate wholesale energy settlements.
The Aquilon Network® enables buyers and sellers
to easily identify exceptions and settle physical and
financial power, oil, and natural gas transactions with
their counterparties. The SaaS platform aligns with
energy market participants’ major systems of record
and helps them increase operational efficiency, and
improve risk management and compliance.
Aquilon is a fast-growing firm with offices in the Chicago
area and headquartered in Houston.
For more information please visit
https://aquiloninc.com/carli-technology/
ABOUT AQUILON

9. ABOUT
Commodity
Technology
Advisory
LLC
Commodity Technology Advisory is the leading analyst organization covering the ETRM and
CTRM markets. We provide the invaluable insights into the issues and trends affecting the
users and providers of the technologies that are crucial for success in the constantly evolving
global commodities markets.
Patrick Reames and Gary Vasey head our team, whose combined 60-plus years in the energy
and commodities markets, provides depth of understanding of the market and its issues that is
unmatched and unrivaled by any analyst group.
For more information, please visit:
www.comtechadvisory.com
ComTech Advisory also hosts the CTRMCenter, your online portal with news and views about
commodity markets and technology as well as a comprehensive online directory of software
and services providers.
Please visit the CTRMCenter at:
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