WHITE PAPER TRANSPORTATION MANAGEMENT DIGITAL JOURNEY: POWERING SUCCESS FOR BULK OILFIELD CARRIERS, CRUDE OIL FIRST PURCHASERS, AND ENERGY TRADERS Page 2 CONTENTS Challenges in Oilfield Transportation ........................................................................................................................................................ 3 The Importance of Supply Chain Visibility ............................................................................................................................................... 3 Advances in Transportation Management Technology .................................................................................................................... 4 Bulk Commodity Carriers ................................................................................................................................................................................ 5 Trimac Advances Digital Transformation and Best-in-Class Trucking Operations ............................................................... 6 Crude First Purchaser & Producer Services ............................................................................................................................................. 6 Oasis Transportation & Marketing Manages Crude Oil First Purchasing, Trucking Fleet Logistics, and Producer Services ................................................................................................................................................................................................ 7 Energy Trading and Risk Management ..................................................................................................................................................... 8 Leading Wholesaler and Marketing Company Drives ETRM Excellence at Scale ................................................................9 Optimizing Costs & Carbon Footprint ....................................................................................................................................................... 11 Driving Transportation Management Success Across the Energy Supply Chain ............................................................... 12 Meet the Author: Jeff O’Block, EVP of Commodity Management, W Energy Jeff O’Block is the founder of Chorus Logistics, the leading provider of cloud- based and mobile transportation management solutions, now a W Energy company. Prior to that, Jeff co-founded Confirmation Corporation, a developer of software that provides confirmation services to subscribed trading companies which was acquired by the New York Mercantile Exchange in 2002. He also founded PSC Energy, a successful energy trading platform that became a popular trade capture, scheduling, and accounting system (now supported by Sungard). Page 3 CHALLENGES IN OILFIELD TRANSPORTATION Just ten years ago, managing the physical and accounting movement of bulk commodities inthe oilfield (crude oil, natural gas, NGL, water, an frac sand), refined products, and finished fuelswas almost entirely paper-based, such as run tickets left in Mason jars, grease sheets for pump-ers, and bills of lading stuffed in the door of a cab. Producers, bulk commodity carriers, crude firstpurchasers, and energy traders have mostly gone digital, although physical run tickets still ex-change hands in the field. Supporting oilfield transportation operations these days requires a raftof software and back-office capabilities, including inventory management, scheduling, invoicing,accounts payable, payroll and compliance. The persistent problem for most companies is that allof this – paper field tickets, back-office soft-ware, and the G&A to manage it all – is expensive,resource intensive and, at the end of the day, onlyprovides a static view of where a commodity is inthe supply chain. Adding complexity, the transportation of oilfieldcommodities, refined products, and finishedfuels increasingly relies on multiple modesof transport. As such, once a molecule leavesthe wellhead, processing facility, or terminal,stakeholders in the value chain must follow itacross a mix of trucks, pipelines, railcars, barges,and vessels. Tracking even a single molecule through multi-mode transportation is challengingfor everyone involved and limits clear supply chain visibility. Oilfield transportation and logisticsrequires effective processes, technology, and people to manage so many moving parts, minimizeoperational costs, and reduce or eliminate demurrage, fees that are charged to shippers fordelays in picking up or dropping off loads at storage facilities. THE IMPORTANCE OF SUPPLY CHAIN VISIBILITYToday’s dynamic energy industry requires more than a static snapshot into where a givencommodity is. It requires a dynamic and real-time view into the flow of every molecule in orderto optimize costs and supply chains. To succeed, companies must accelerate time from orderto cash flow, contain costs, deliver exceptional customer service, and meet evolving marketconditions head on. Best-in-class operations also demand effective risk management thatincorporates environmental stewardship - not just financial and regulatory risk mitigation -especially as Wall Street, private equity, and the public look beyond the wellhead into thebroader energy supply chain for ESG improvement. Everyone has a stake in the oilfield transportation game, including oil & gas producers, pipelineoperators, marketers, natural gas processors, and downstream refineries (see final section for alist of benefits for these companies). This paper will focus on solving the unique transporting andrisk management challenges of bulk commodity carriers, providers of crude oil first purchasingand producer services, and energy traders. © 2023 W Energy | WEnergySoftware.comPage 4 molecule passing through the energy value chain. ItsTransportation Management System (TMS) consists of aSaaS product called AXLE Hub, which provides back-office management tools for inventory management,intermodal scheduling, invoicing, payroll, andregulatory reporting. Connecting the field to the back-office applicationis TollTagger, a mobile app designed for Apple andAndroid devices, that continuously synchronizes driverlocation, speed, and status with the cloud. It leveragesbusiness process automation technology to enable ADVANCES IN TRANSPORTATION adaptive routing similar to logistics systems used by MANAGEMENT TECHNOLOGY UPS and FedEx. As a result, commodities areautomatically routed along the most efficient path from Three major waves of innovation have intersected towellsite to the final destination and points in between. enable a paradigm shift in how stakeholders up and Importantly, AXLE Hub and TollTagger combine to down the value chain move and track commodities. create a two-way network that automatically links The first is the cloud. With on-demand access from producers with their carriers to optimize logistics in real anywhere and automatic provisioning of storage and time and simplify transactions across any mode of compute power, the cloud created a Cambrian explosion transport (truck, pipeline, rail, vessel, barge). of innovation and new opportunities to build software as a service (SaaS), avoiding the limitations and costs ofPrecision is paramount because oilfield transportation traditional on-premise software. involves unique variances, such as oil tanks that expandin the sun and dents in a hauler that skew volumetrics Secondly, mobile devices have brought real-time data and impact margins. As a result, W Energy’s TMS access and acquisition into the oil field. The smart phonesincorporates advanced technology to ensure accurate that field staff now carry in their pockets, and the tablets measurements of the commodities it is responsible for sitting in the truck, introduced exciting transporting, such as tank strapping, API gravity, and new opportunities to support lease assessments, thenatural gas volume to BTU conversions. transportation process and tracking each molecule. This includes collection of key metadata for every ““ molecule such as volume, gravity, BS&W draw and tank strapping. But these devices also carry real-time GPS, accelerometers, thermometers, and cameras. The upshot PRECISION IS PARAMOUNT is that carriers, purchasers, and traders can now process BECAUSE OILFIELD shipments digitally, then follow oilfield commodities, TRANSPORTATION INVOLVES refined products, and finished fuels in real time to the end of the journey with a photo to mark each milestone. UNIQUE VARIANCES, SUCH AS OIL TANKS THAT EXPAND IN And finally, 5G brings data access to even the most THE SUN AND DENTS IN remote of locations. It allows images to be transferred in real time and allows a large pipeline of data to be used for A HAULER THAT SKEW optimization of the whole supply chain. VOLUMETRICS AND “ Oilfield transportation management has advanced IMPACT MARGINS. further with innovators like W Energy who is executing on a roadmap to provide upstream and midstream companies with complete visibility into every © 2023 W Energy | WEnergySoftware.com Page 5 In oilfield transportation, the biggest challenge scheduling, invoicing, payroll, and regulatory that companies face is centered around accounting reporting. It enables new bulk commodity haulers to for custody transfer. W Energy solves get up and running fast with a lean team while the accounting and transportation management empowering existing haulers to shrink G&A, integration problem by providing the only single SaaS technology, and fuel costs. The system solution that combines core transportation and risk even manages management capabilities with financial accounting to the complexity of accelerate transactions from start to finish. This unique international fuel combination of TMS and accounting in one solution tax agreement drives unprecedented cash flow and supply chain (IFTA) regulatory visibility for bulk commodity carriers, crude oil first reporting and purchasers, energy traders, and other helps haulers get transportation stakeholders. paid much faster, eliminating the BULK COMMODITY CARRIERS need to factor invoices. “ With W Energy ,IT’S LIKE UBER FOR WATER manyHAULERS, A SIMPLE AND operational barriers are eliminated, allowing anyoneSEAMLESS PROCESS FOR to get into the trucking business. A producer or even “ pipeline operator can seamlessly manage carrierOUR PRODUCER CUSTOMERS.operations by effectively creating a virtual trucking fleet through W Energy, putting them in control of how and - Herb Chambers, CEO at EVX Midstream where commodities are moved. For pipeline infrastructure and disposal wells that can cost billions to build, this puts more power in the hands of midstream Producers have long extracted more than just oil, natural service providers to extract more value from their assets gas, and natural gas liquids. There are often other while extending their reach with a network of commodities that can be sold or must be disposed of, intermodal capabilities, including rail and marine. including produced water, sulfur, CO2, and even lithium that is now being extracted from a well’s petroleum brine. Add to these commodities a long list of otherCHORUS LOGISTICSOIL TRUCKING TRANSPORTATION materials in the oilfield supply chain, including water andCOSTS PER MILE MGNT SYSTEM sand for hydraulic fracturing and aggregate required for concrete. Producers and service companies must 2% Liscense PermitsCHORUS LOGISTICS therefore track multiple types of commodities across15% Back Office & Collections 0% TRANSPORTATIONMGNT SYSTEM multiple modes of transportation. Those who do it well 10% Dispatch & Management 0% can dramatically reduce costs while gaining a deeper4% Marketing & Sales0% 12% Depreciation 30% view into where, when, and how commodities areSAVINGS$1.8010% Maintenance $1.25Per Barrel flowing through the value chain. of Oil Reduced 20% FuelDamage W Energy’s TMS provides a complete back office for bulk 4% Carrier InsuranceChorus Groups commodity carriers, including automated dispatch, 23% Driver Salary w/ Expenses inventory management, intermodal © 2023 W Energy | WEnergySoftware.comPage 6 TRIMAC ADVANCES DIGITAL TRANSFORMATION AND BEST-IN-CLASS TRUCKING OPERATIONS Trimac owns and operates one of the largest trucking fleets in North America, hauling an extensive range of products and commodities with more than 2,000 trucks. The company had relied on a large, legacy transportation management software vendor to manage fleet logistics, dispatch, accounting, invoicing, and other back office carrier functions. Lack of innovation from its legacy software vendor, complexities, and cost of preparing regulatory reporting, and the inability of the software vendor to integrate systems with truck ELDs fleetwide led Trimac to seek another transportation management solution. As Trimac successfully executes its growth strategy and advances operational efficiency further through digital innovation, the service provider recognized the value of cloud-based transportation management solutions, which offer automation and real-time logistics capabilities to match its growth profile. Trimac switched to W Energy to manage fleet logistics, optimize fuel usage, and accelerate regulatory reporting.CRUDE FIRST PURCHASER & PRODUCER SERVICES Crude first purchasers share a lot of the same challenges and many of the solutions as bulk commodity carriers. This includes the ability to automate dispatch, optimize truck routes (fuel and cost) in real time, and ensure DOT“W ENERGY SOFTWARE’S TRANSPORTATION MANAGE- MENT SYSTEM HAS TAKEN OUR compliance. It can be logistically complex, which is why BUSINESS FROM THE STONE AGES INTO THE NEW AGE OF “ first purchasers require digital systems to track deal flow, manage field tickets, balance volume TECHNOLOGY. measurements, and manage fleet operations. At the same time, these midstream companies can look - Jim Blattne, President at Bella Vida Logistics and feel like an upstream business since many first purchasers also take on the burden of allocating sales volumes back to the wellhead and cutting checks to interest owners on behalf of producers. Traditional software solutions force users into disconnected © 2023 W Energy | WEnergySoftware.com Page 7 workflows across marketing, accounting, and revenue disbursement, limiting supply chain visibility, delaying invoices, and impacting cash flow. W Energy cloud-based TMS and mobile app automates e-ticket flow and field data capture for measurements that impact sales runs, such as gravity, BS&W, and temperature. It provides first purchasers everything needed to buy, move, and sell crude oil with category leading technology to manage contracts, allocate sales, value purchases, track inventory, and manage the complexities of payments to interest owners. What truly sets W Energy's TMS apart is the seamless integration with custody transfer, the general ledger, and accounts receivable. This is simply non-existent with other solutions. The all-inclusive LEADING FIRST PURCHASER & ENERGY MARKETER transportation management and accounting solution is MANAGES CRUDE OIL FIRST PURCHASING, TRUCKING unmatched in the market. In the first purchaser space WFLEET LOGISTICS, AND PRODUCER SERVICES IN A Energy advances operational efficiency further by SINGLE SAAS SOLUTION connecting all of the workflows related to producer services, including division order, revenue accounting A leading Midland based first purchaser buys and disbursement. With W Energy TMS, your team can commodities at the wellhead for a discount, blends, easily stay tuned into markets with analytics and OPIS/transports, holds, and sells crude oil while also managing DTN pricing integrations, model “what if” scenarios, payments to interest owners and regulatory reporting optimize deal flow, and shrink your back office costs. on behalf of its producer customers. It’s marketing,transportation, producer services, and accountingsoftware provider lacked robust mobile and ERPfeatures and forced users to work in disconnectedapplications that created barriers to productivity andburdened the company with a high total cost ofownership. The service provider wanted to replace its legacysoftware vendor with a cloud-based solution thatmatches the scale of its rapidly expanding operations byautomating dispatch, field tickets, accounting, andmonthly producer settlements while enabling it tofurther optimize fleetwide logistics in order to reducefuel costs and emissions. W Energy provided thecompany with all of the back office and mobilefunctionality required to buy, move, and sell crude oil ina single solution that also enables it to seamlesslymanage value-added producer services, includingallocating sales volumes, issuing payments to royaltyand mineral interest owners, and preparing stateregulatory reporting. © 2023 W Energy | WEnergySoftware.com Page 8 ENERGY TRADING & operations, such as hydraulic fracturing where even a small miscalculation can result in significant monetary RISK MANAGEMENT loss. And for regulatory, suppliers face major challenges in maintaining current physical position reports and “ ensuring DOT compliance.WITH W ENERGY, WEELIMINATED KEYING IN 800 There are many moving parts, yet legacy solutions and big box ERP software that aim to solve energy tradingTICKETS PER MONTH AND present cost and complexity overkill for the industry andSHORTEN TIME TO GENERATE can take a year and massive capital outlay to deploy. “CUSTOMER STATEMENTS. W Energy's TMS is the only solution that can be deployed in less than two months and at a fraction of the cost of - Mike Grunder, Operations Manager, legacy software and big box ERP. It automatically Endeavor Tank & Transport records transactions and incorporates real time OPIS and rack prices into cloud-based deal fulfillment screens, enabling marketing teams to instantly view suppliers Energy trading is a complicated business where traders and customer pricing and KPIs (e.g., run time, drive time, must constantly track rack and OPIS prices, forecast load/unload time), and margin calculations. Plus, monthly and annual weighted averages, and determine leverage trend graphs and weighted average algorithms optimal times to load from yard, pickup from rack, to gain unprecedented visibility into high volume stockpile, hold, and sell. Energy trading is fiercelymonthly transactions and empower your organization to competitive, leading oilfield suppliers to optimize fleetdouble or even triple output. With W Energy's TMS, you’ll movement to better service customers, a complex accelerate accounts receivable and cash flow while dance that involves continuous dispatch updates and mitigating risks with automatically generated physical analysis of electronic logging data (ELD) and driver position reports. utilization to prevent turnover. On the risk side, margins on trucking operations are constantly narrow, requiring The real time communications unlocked by W Energy's suppliersTMS is also enabling predictive inventory to precisely gauge fuel demand for intensive oilfield © 2023 W Energy | WEnergySoftware.comPage 9 - both long and short - at storage locations, virtually number of monthly transactions, limiting accountability eliminating costly demurrage fees for trucking. In oilfield and visibility into buying. It operates a large fleet of transportation, not everything goes as planned, requiring trucks nationwide, adding operational and logistical carriers, dispatchers, and suppliers to collaborate around complexity through reliance on paper run tickets and a wide variety of data to adapt plans and keep moving. manual invoicing processes. What’s more, Paper-based Additionally, with real time visibility into prices at origin processes, inconsistent routing of tickets from and destination locations, W Energy's TMS provides operations, and manual workflows delayed customer shippers with increased optionality and enables rapid invoicing by two weeks and as much as 2 months, response to supply chain anomalies, increasing agility continuously impacting the company’s cash flow from and improving margins. delayed payments. With complex state tax obligations that vary from product to product, it also faced significant delays for regulatory reporting and taxes that “ often required three months to prepare. THE OILFIELD SUPPLIER The company deployed W Energy's TMS solution to GAINS UNPRECEDENT- automatically record transactions and integrate real time OPIS and rack prices. Through intuitive, cloud- ED VISIBILITY INTO 2,000 based fulfillment screens, its marketing staff can MONTHLY TRANSAC-instantly calculate margins, track suppliers and TIONS, ENABLING IT TO“ customer pricing, and view real time key performance indicators, including run, drive, and load times. TRIPLE VOLUME OUTPUT. Leveraging trend graphs and weighted average algorithms, the oilfield supplier gains unprecedented visibility into 2,000 monthly transactions, enabling it to LEADING WHOLESALER AND MARKETINGtriple volume output. COMPANY DRIVES ETRM EXCELLENCE AT SCALE W Energy provides the company with a complete real A major energy trader procures and supplies oilfieldtime fleet optimization and invoicing solution that operations throughout major basins, including fuel- includes an advanced mobile app for dedicated use on intensive hydraulic fracturing. The company had tablets and printing integration with mobile printers, relied on manual, paper-based processes for a large enabling it to track inventory and © 2023 W Energy | WEnergySoftware.comPage 10 generate current customer processing, dispatching, and delivery insights. The solution enables dispatch to better optimize fleet performance by seeing if drivers are over or underutilized and, in some cases, allows drivers to completely bypass dispatch by using a pickup from or deliver to nearest location feature. The mobile app also leverages real time route optimization capabilities similar to FedEx and UPS to provide drivers with the fastest routes based on current road conditions, taking into account hazmat restrictions if applicable, such as traffic and road closures. The W Energy TMS solution provides actionable insights that help the company mitigate monetary loss by better understanding risks in the field, including complex frac fueling operations, maximizing margins. The solution automatically captures performance history for trucks and drivers (e.g., speeding, running stop signs) and streamlines medical certification compliance with DOT. In addition, W Energy's TMS solution automatically creates physical position reports to help the oilfield supplier better manage risks. By deploying W Energy’s TMS solution, the company’s accounting team reduced invoicing time to a maximum of four days with 90% of customer invoices being submitted within one day while giving it the assurance that it has invoiced 100% of its accounts receivable. The solution also helps the oilfield supplier avoid millions in sales tax reporting (from a well-known ETRM tax software package) with W Energy’s all-inclusive tax module that cut tax preparation for the company from three months to thirty minutes. The solution has had a significant positive impact on its cash flow, enabling the company to purchase more finished fuels and refined products, increase sales, and remain positioned for growth. © 2023 W Energy | WEnergySoftware.comPage 11OPTIMIZING COSTS & CARBON FOOTPRINT Given the importance of effectively transporting oilfieldreal time with turn-by-turn directions for drivers that commodities, refined products, and finished fuels nowintegrates traffic, weather, and predictive analytics to and in the future, choice of technology will play an evenoptimize every route, prevent trucks from waiting in line larger role than it has to date as organizations reach for with engines idling, and avoid deadhead runs. In turn, operational and cost efficiency. Transportation companies who optimize their fuel usage can lower management must match the needs of today’s oil & their emissions, a win-win for operators and the gas teams who must not only optimize revenue and environment. costs, but also optimize for emissions and an organization’s carbon footprint. Technology should The solution’s latest round of new features also includes address all of these business drivers directly, helping your team meet TRANSPORTATION a database of every type of hauler used in the oilfield, make, model, the ever evolving needs of oilfield MANAGEMENT MUST and year with emissions data so you transportation and ESG. MATCH THE NEEDS OF can benchmark your equipment, With prices for oil and diesel fuel at TODAY’S OIL & GAS know exactly which trucks will lower your carbon footprint, and record highs, everyone with a stake TEAMS WHO MUST NOT make the most informed in oilfield transportation has a ONLY OPTIMIZE REVENUE procurement decisions. W Energy’s vested interest in minimizing fuel usage. W Energy’s TMS can instantly & COSTS, BUT ALSO TMS also taps into ELDs, enabling the back office to analyze driver reduce fuel usage fleetwide by OPTIMIZE FORutilization, track safety optimizing every truck load in EMISSIONS & AN performance, and ensure DOT ORGANIZATION’S compliance. CARBON FOOTPRINT. © 2023 W Energy | WEnergySoftware.com Page 12DRIVING TRANSPORTATION MANAGEMENT SUCCESS ACROSS THE ENERGY SUPPLY CHAIN W Energy is responding to the transportation needs of the industry by offering each stakeholder in the supply chain deep insight into where commodities are at every stage and at every moment. Equipped with its AXLE Hub and TollTagger technologies, upstream, midstream, and downstream gain new agility, business performance, cost efficiencies, and new ways to improve ESG. Benefits for companies along the supply chain include: • OIL & GAS PRODUCERS – Simplifies invoicing, • CRUDE OIL FIRST PURCHASERS – Enables crude eliminates the transportation management cost purchasers to source and streamline delivery of center, and provides a granular view into how, specific commodity grades and composition, sim- where and when commodities are moving. plify, and accelerate delivery of producer services. • BULK COMMODITY CARRIERS – Increases oper- • NATURAL GAS PROCESSORS – Reduces transpor- ational efficiencies, reduces G&A and technologytation costs and risks, improves marketing opera- costs, and enables savings to be passed back to tions, and keeps producers and customers producers. up-to-date. • PIPELINE OPERATORS – Provides customers with• REFINERIES – Provides a deep view into long sup- a complete intermodal transportation solution and ply chains and enables visibility into the movement enables the operator to control the destiny of the of clean fuels. commodity it is moving. • ENERGY TRADERS – increases optionality, maxi- mizes margins, enhances agility and competitive- ness, and mitigates financial and regulatory risks. More than ever before, energy companies need a holistic picture of the flow of commodities across basins and modes of transportation, viewed from the right lens in ways that support their business drivers in the energy value chain. W Energy continues to deliver on its vision of the only fully unified oil and gas SaaS ERP, spanning upstream and midstream workflows, including financials, upstream accounting, land management, production operations, gathering, pipeline, plant accounting, marketing, trading, and risk management. ENERGY VALUE CHAIN © 2023 W Energy | WEnergySoftware.com Page 13 ABOUT W ENERGY W Energy, headquartered in Tulsa, Oklahoma, revolutionizes the oil and gas industry with its leading cloud- based energy platform. Made for upstream and midstream companies, our platform combines advanced software with deep industry knowledge, offering solutions spanning Field Service Management, Production, Accounting, Land, and Transportation. Countless energy professionals turn to W Energy to help their businesses adapt and grow. As the energy industry evolves, so does W Energy, continuously refining our platform to empower today’s needs and tomorrow’s advancements. Visit us at www.wenergysoftware.com to see how we’re shaping the future of energy operations.