University of Houston – GENB 3302 Corporate Project

Wipro Training Presentation

Overall Downstream

Manufacturing and Execution

Systems• Computerized

systems used in the manufacturing process to provide information to a manager that is useful in their decision-making processes

Marketing Customer Value &

Pricing• Communicating

the amount of benefit a customer will receive from a service or product

• Advising a pricing strategy that will result in maximum profitability

Supply Chain

• The flow of all parties involved in transporting a service or product from one destination to another

Downstream process begins once hydrocarbons reaches the refinery

From Midstream to Downstream

Manufacturing Execution SystemsYahairy Arseno & Timothy Nguyen

What is Manufacturing Execution Systems?

Computerized systems used in the manufacturing process to provide information to a manager that is useful in their decision-making processes

Examples: Aspen Tech, Honeywell RPMS

Access Implement Define Rollout Migrate Ensure

Wipro’s MES Process

How does a refinery work

Waste Treatment

Distributed to outside companies who have different uses for the waste

Treating & BlendingAfter impurities are removed, fractions are made into various commercial products

Chemical ProcessesCracking Unification Alteration

Fractional Distillation ProcessThis process heats the crude oil to separate the hydrocarbons

ExtractionCrude oil is extracted from the ground and transported to an oil refinery

Crude Oil to Different Commercial ProductsThe process map above shows the three most common products of oil refineries: gasoline, natural gas, and liquefied gas

Importance and Improvements of MES

Process optimization to increase yield: The main purpose of MES is process optimization. With technology evolving everyday, companies must progressively and

continuously make strides in their production process to increase the amount they can produce in a certain time frame, with a certain amount of labor available It’s yield

It’s a simple concept in that if your company can increase its yield it can become more successful in the production and distribution of its products and thus cut resource costs to gain more profit.

Process control improvements: A couple of ways to improve process control is to adopt Lean Thinking. Lean Thinking is a strategy focused on eliminating waste throughout all

manufacturing processes. (DOWNTIME) can also help improve manufacturing processes.

An Effective Cost Saving Theory

DOWNTIME

Tools used to manage MES

Managed by employers who continuously update and check their systems to make sure their systems are operating at 100% efficiency

Vary from administrating systems to providing technical support on the MES Technical Support Specialist

MES product vendors that Wipro has partnered with include GE-Fanuc, Apriso and SAP MES (Visiprise)

Marketing Customer Value & PricingAna Hernandez, Diego Luna & Kathryn Titus

What is Marketing Customer Value & Pricing?

Communicating the amount of benefit a customer will receive from a service or product

Advising a pricing strategy that will result in:

Improving same-store sales

Strategies that result in best value

Strategies that maximize profit

Automation

Provides site system product selection POS application customization Pre-lab testing Lab testing of the product Staging and deployment services Post implementation POS application support Field based maintenance of IT and non-IT devices

Can cut down 30% implementation cost and 25-35% support costs through innovative working models

What kind of marketing is used?

• Vendor management inventory enablement projects• Has achieved 99.9% reliability in product replenishment

for a global major

Wet Stock Management

• Help customers lower costs• Increase efficiency• Efficiently controls fueling• Streamline record keeping and management

information systems• Drive the most customer value

Fleet Cards

Reliability

Improving same-store sales

Analyze sales

Data mining

Selective product offering

Shifting product offerings according events/time of year

• Houston Texans mugs during football season

• Easter candy at Easter time

• Gourmet foods that have no nearby competitors

Strategies that result in best value

Differentiate product through marketing Examples:

Chevron with Techron Shell V-power Shell: Nitrogen enriched gas

Pricing of Refinery Products

Buyer need & value to buyer Seller need

Shareholder profit

Depreciation Taxes

Interest

Cost of finished product

Cost to produce in the

refinery

Capital Depreciation, Maintenance,

Labor, Experience,

Fuel

Cost of feedstock

Parameters & Considerations in Pricing

1. Acceptable margins (Cost of Production per barrel)

2. Maximize price customers are willing to pay

3. Limitations in pricing due to competition

4. Evaluate transportation costs

5. Evaluate crude assey (Composition: lighter crude sell for more compared to heavier crude, Sweet vs. Sour)

6. Evaluate availability (Time, Volume)

7. Commercial Terms (Terms of Payment)

8. Guarantee of Supply (Penalty for not delivering quantity or quality)

What pricing strategies are used?

Research Octane Number (RON) Higher RON, higher price

Pricing Competition Less competition, more profit

Margins Spot pricing vs. Contracts

Seasonal adjustments in price

Track and Manage MCV

Downstream Retail Marketing Retail outlet automation Inventory enablement Retail marketing analytics

Downstream B2B Marketing Streamlining sales and operations planning processes and

the implementation of key enabling applications E-ordering solutions for B2B customers, which streamline

end-consumer ordering, online billing and reliable information on delivery

Downstream Revenue

Refineries- ExxonMobil, Valero, Marathon High volume Small margins Walmart

Petrochemical- Sasol, Formosa Chemical Medium volume Medium margins Macy’s

Specialty Chemical- Albemarle, Eastman Chemical Small volume High margin Boutique

Margins on the Refined Product

Usually depends on the fluctuating demand of nations

Governments continue to expand their refinery capacity

Low profit margin compared to Upstream Demand for oil has peaked as people convert to

biofuels and hybrids

The average net profit margin of the gas and oil industry is 5.9%

A New Type of Fuel: Biofuels

Use mainly trees, grass, bushes called biomass

Growing industry, yet subsidized by government investment Only 3 or 4 major

companies

Future rising problem with food industry

Supply ChainRachel Hsieh & Thomas Stacy

What is the Supply Chain Process?

The flow of all parties involved in transporting a service or product from one destination to another

1. From the production to the refinery

2. From the refinery to the consumers

Exploration and Production

Transportation to a storage tank• Via pipeline or

maritime

Storage• Crude storage

tank

Possible steps after Storage

Directly to refinery Secondary storage then to refinery

Commodity market then secondary

storage then refinery

From Production to Refinery

Oil RefineryProduct pipeline

Retail storage terminal

Possible Distribution Methods

Transported to retail market for

consumers to buy (gas station)

Transported to industrial markets

Transported to commercial

markets (both for wholesale

customers)

From Refinery to Consumers

Goals of Supply Chain

Minimize material procurement

Maximize manufacturing

capacity and sales

Meet demand numbers

Oracle E-Business Suite Supply Chain Management (R12)

Management systems that allow them to have real time visibility

An application to integrate supply chain processes from design, planning, procurement and manufacturing

Can expect a complete solution to create information driven chains

Wipro focuses on Supply Chain Management to better understand the needs and wants from their customer challenges

Third Party Logistics (3PL)

Seen as critical strategic partners who can optimize the supply chain by providing competitive advantage

Analyze data from various sources and convert into information

Tools help Third Party Logistics manage supply chains for their customers

Outsourcing allow companies to avoid locking in capital warehouses, trucks, etc.

Legal

• Sarbanes-Oxley Act 2002 (SOX)

• Traveling Permits

Transportation of Hydrocarbon

• Marine Terminals

• Pipeline Infrastructure

Human Resources

• Human Resource Reports

• Skilled workers with technical skills (SAP)

Requirements of the Supply Chain Process

Sarbanes-Oxley Act 2002 (SOX)

Regulate rules and standards issued by the Securities and Exchange Commission

Covers a range of various topics from criminal penalties to corporate board responsibilities.

Transportation of Hydrocarbons and Human Resources

Two ways of transporting hydrocarbons by tanks, overloads (on roads or railways) by sea (in tankers) and transferred through pipelines throughout

the country

Depends on the companies investment, cost, and certainty of the continuation of energy supply

Human Resource Reports are used to generate various views of the work force

Training and Succession Planning maintains accurate data about the skill sets of the company and maintain data in the warehouse

The Future of Gas and OilJessica Huynh & Diego Luna

The Impact of New Processes

The introduction of new technologies and processes that accelerate the extraction of natural resources can lead to greater revenue

Hydraulic Fracturing

Horizontal Drilling Rigs

Oil Sands

Hydraulic Fracturing

Also known as, Fracking (LGN, NGL, LPG)

Drilling until natural resources are found and begin extraction

Extraction done by two tubes, one inside of the other Outer tube releases water to

break rocks to start releasing gas

Once gas is released, it is extracted through the inner tube

Horizontal Drilling Rigs

Directional drilling allows access to multiple wells from the same vertical well

Horizontal drilling drastically increases production

Revitalizing legacy oil and gas basins and putting new emerging basins on the map

Oil Sands

Two main processes Drilling: using a similar process to fracking Open Pit: taking the dirt combine with oil to refineries

where through chemical process applying heat at high temperatures the oil starts separating from the dirt

The Next Big “Thing”Innovative Pipeline Technologies

X-Stream Pipelines A system that is designed

to reduce the cost of deep water pipelines

Reduced pipeline thickness, welding time and installation

The Next Big “Thing”The Digital Oilfield

A Web-based visualization platform where companies can manage, measure and track data regarding the oilfield

Rockwell Automation, Baker Hughes and Cisco Systems

Leading Emerging Countries

United States of America

Natural gas market increasing

Using LGN processes creating greater revenue

New technologies focused on environmental care

Canada

The recent discovery of oil sands

New ways of extraction to accelerate production

Other Emerging Countries

Kazakhstan

The oil & gas industry’s role in total gross domestic product (GDP) increased from 10.9% in 2001 to 25.2% in 2012

Reserves at approx. 30.0 billion barrels of oil 1.8% of total global reserves

Natural gas reserves of 45.7 trillion cubic feet 0.7% of total global reserves

Mozambique

Hydrocarbon development: LNG Plant and supporting infrastructure

Recent offshore natural gas discoveries

Country is in revising Petroleum Law and it is expected participation will increase