From Simulation to Marketing

From Simulation to Marketing

10/17/2001 10/17/2001
Paul Towne and Blake Brooker Paul Towne and Blake Brooker
Marketer and Engineer Marketer and Engineer
performance
performance
raised to the power of El Paso
raised to the power of El Paso
ep
ep
2
From Simulation to Marketing
From Simulation to Marketing
Traditional Hydraulic Simulation Traditional Hydraulic Simulation
Simulations for Marketing Simulations for Marketing
Physical / Financial Models Physical / Financial Models
Conclusions Conclusions
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Traditional Approach
Traditional Approach
Cost focus Cost focus
Measure hydraulic efficiency Measure hydraulic efficiency
Situational analysis Situational analysis
Capital analysis Capital analysis
Performance measurement Performance measurement
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Marketing Fundamentals
Marketing Fundamentals
Pressure = $$$ Pressure = $$$
Assets = Options Assets = Options
Hydraulic Model = Risk Management Hydraulic Model = Risk Management
Pipelines = Time machine Pipelines = Time machine
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Simulation for Marketing
Simulation for Marketing
Increase Market Share Increase Market Share
Satisfy Market Demand Satisfy Market Demand
Capital and Capital and Optionality Optionality
Risk Management Risk Management
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Market Share
Market Share
Convert Cost into Revenue Convert Cost into Revenue
Margin Analysis Margin Analysis
Revenue Management approach Revenue Management approach
Asset Positioning and Competition Asset Positioning and Competition
Example: Example:
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Satisfying Market Demand
Satisfying Market Demand
Commoditization Commoditization and Interruptible and Interruptible
Speculative facilities Speculative facilities
Physical based Financial Options Physical based Financial Options
Non Non- -traditional approach traditional approach
New Services New Services
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Capital and
Capital and
Optionality
Optionality
Rationalizing efficiency Rationalizing efficiency
Selection criteria Selection criteria
Asset deployment Asset deployment
Asset re Asset re- -deployment deployment
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Risk Management
Risk Management
Spark Spread Spark Spread
Physical / Financial modeling Physical / Financial modeling
Expanded Cost modeling Expanded Cost modeling
Real time options Real time options
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Conclusions.
Conclusions.
Physical modeling capability is critical Physical modeling capability is critical
Physical assets are financial options Physical assets are financial options
Detailed physical simulation models are Detailed physical simulation models are
risk management tools. risk management tools.
Integration of physical and financial Integration of physical and financial
models will expand. models will expand.