Study Puts $5.6 Million Annual Price Tag on U.S. Oil and Gas Trading and Risk Management System Inefficiencies

Houston and London - 2 August 2016

U.S. refiners with outdated trading, transaction and risk management systems can overlook millions in potential annual revenue, according to a study commissioned by OpenLink, the global leader in trading and risk management solutions for the energy, commodities, corporate and financial services industries.

Hobson & Company, a research firm focused on return on investment (ROI) and total cost of ownership (TCO) studies, conducted a sample survey of eight of OpenLink’s existing energy clients, finding that a refinery operation with an implemented ETRM system could potentially save up to $5.6 million each year in improved operational efficiencies, amounting to nearly $30 million in savings and revenue growth over a 5-year period. The annual benefits add up as follows:

  • Up to $1.5 million in efficiency savings when replacing legacy IT, disparate systems and spreadsheets for contract management, logistics, inventory management, ordering, regulatory tax reporting and settlement,
  • Up to an additional $1.1 million through better compliance management and risk mitigation, and
  • Up to $3 million in business growth and new revenue streams.
  • The study, “Driving ROI: The Business Case for a Comprehensive ETRM Liquid & Bulk Commodities Solution” captured the collective benefits participants attributed to their ETRM solutions. Clients saw a range of improvements, including:
  • Up to 70% reduction in time spent on reconciliations across departments and operations
  • Up to 80% reduction in time spent managing rack pricing
  • 50% reduction in time spent monitoring trades and managing risk
  • Up to 50% reduction in time spent on settlements/invoicing
  • A 30% drop in the amount of time spent on deal capture and processing
  • One less tax infraction/penalty due to reduced risk of errors in tax calculations
  • One less default per year as a result of credit extended to counterparties
  • The ability to house data in a single source for analysis and reporting, as well as running risk scenarios.

“This study is a remarkable illustration of the rewards that come with investments in comprehensive ETRM solutions,” said James Potts, Director, Americas Energy & Commodities for OpenLink. “The research presents a fuller understanding of the ROI, and the business growth that can be sustained despite the demands of complex regulations and market volatility. A company that makes a five-year investment in ETRM solutions can generate positive returns within 14 months and can capture an astounding 432% ROI.”

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