This week when nominations come to mind your thoughts naturally go to the political candidates in general, and the Tampa convention in particular. But don't forget about that other kind of nomination - the most important step in the scheduling of NGLs and other hydrocarbon transportation. Today we will continue our blog series on the Art of NGL Distribution by examining exactly how the nomination step takes place. We’ll continue the scenario covered last week in Movin’ Down the Line – Conway Propane to Janesville, WI on MAPL. That’s a nomination from Kansas, so we thought a politically themed title would be appropriate.
Recap of Distribution and our MAPL Propane Scenario
In Part 1 of this series we talked about the critical role of Distribution link NGL commercial deals to the operational activity necessary to get the product moved from point A to point B. We talked about steps in the Distribution process, Distribution terminology and looked at a ‘keep dry’ propane scenario where a marketer handles the propane production at a typical refinery with local trucks. Part 2 took us deeper into Distribution operations, looking at what it takes for a propane marketer, Big Strickland Propane (“BSP”) to acquire propane in MAPL’s Conway, KS storage and to get that propane moved to a distribution terminal on the MAPL system in Janesville, Wisconsin. That got us into an examination of tariffs, physical movements and scheduling. Now we can one level into the details how BSP actually nominates volume to move on the MAPL system.
Nominations and Enterprise CIS
In the NGL world, a nomination (aka, a “Nom”) is the request from a shipper to a service provider (i.e. a pipeline) to move barrels from the shipper’s account in one location to another account - either in the same location or in another location. That destination account might belong to the shipper or to another company with an account at that location. If the nomination origin and destination are the same, it is simply a transfer from one company’s account to another, which is called a Product Transfer Order, or PTO. The shipper must have an agreement in place with the pipeline for the service, and as we discussed in Part 2, the transaction is done at rates and pursuant to the rules in the pipeline’s tariff.
Back in the olden days, noms and PTOs were all handled with faxes and a lot of clarifying phone calls. Today many companies still use the 2012 version of the fax – email. The shipper emails the pipeline the nomination and the pipeline enters the information into whatever operational system they use to keep track of inventory balances, product movements and other operational data. Fortunately for the industry, Enterprise – the big Kahuna of NGL product movements (and owner of MAPL) invested in a computer system to make all of these functions happen on-line in a single user interface called the Enterprise Customer Information Solution, or CIS. Readers familiar with natural gas Electronic Bulletin Board (EBB) nominating systems would immediately recognize similarities with the Enterprise CIS. However, the key here is that while such systems are the norm in the natural gas world, they are anything but the norm in NGLs. That is the reason that we started with the Enterprise MAPL system in our scenario. It makes the story much more interestin.
What does this CIS thing look like, anyway?
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