Dec 19, 2017

BDO releases report on the future of oil and gas

Sophie Chapman
2 min
BDO releases “Energy 2020 Predictions: The Near Future of Oil & Gas”
The accounting company, BDO Global, has released a report forecasting the oil and gas industry future up until 2020. The r...

The accounting company, BDO Global, has released a report forecasting the oil and gas industry future up until 2020.

The report, dubbed “Energy 2020 Predictions: The Near Future of Oil & Gas”, addresses five key actions that will take place within the sector.

The report predicts big news for Africa, arguing that through the growth in LNG imports and solar power, four in five African’s will have electricity.

Currently, Africa contributes to 16% of the world’s population, and only 32% of the continent’s population has access to electricity.

“Electricity in Africa has remained expensive—a particularly difficult barrier for its population. However, as noted by the Africa Energy Outlook, “huge renewable resources remain untapped,” with further potential from excellent solar capabilities across all of Africa.”

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“BDO predicts that oil prices will be low and subsequently prompt countries within the Gulf Cooperation Council to diversify their energy mix by subsidising renewable energy projects.”

Energy 2020 Predictions also claims that four other significant changes will happen over the next few years.

“By 2020, at least five countries will see foreign hackers take all or part of their national energy grid offline through Permanent Denial of Service attacks,” the report adds.

“While overall spending on R&D may decline, most of the spending that does occur will go towards technologies that enhance exploration and production (E&P) efficiencies.”

BDO’s final claim is that within the next three years, the average E&P company will use 10% of its big data, improving from the average used in 2017, but very far from full potential.

According to the report, the average offshore rig uses less than 1% of the data it generates from sensors for analysing and decision making.

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Jun 21, 2021

Magellan, Enterprise and ICE unveil new futures contract

futures
Oil
trading
USA
Dominic Ellis
4 min
The Midland WTI American Gulf Coast contract is being launched in response to market interest for a Houston-based index

Magellan Midstream Partners, Enterprise Products Partners and Intercontinental Exchange (ICE) are establishing a new futures contract for the physical delivery of crude oil in the Houston area.

The Midland WTI American Gulf Coast contract is being launched in response to market interest for a Houston-based index with greater scale, flow assurance and price transparency. It will use the capabilities and global reach of ICE’s trading platform and is due to be launched by ICE by early 2022, subject to regulatory approval. 

The quality specifications of the new futures contract will be consistent with a West Texas Intermediate crude oil originating from the Permian Basin with common delivery options at either the Magellan East Houston terminal or the Enterprise Crude Houston terminal. In support of this new futures contract, Magellan and Enterprise anticipate discontinuing their existing provisions for delivery services under the current futures contracts deliverable at each terminal once the new contract receives regulatory approval and is finalised. 

“Magellan is pleased to join forces with Enterprise and ICE to offer this leading-edge joint futures contract,” said Aaron Milford, Magellan’s chief operating officer. “The new contract improves the transparency, flexibility and marketability of Midland WTI crude oil for Gulf Coast and export customers while maintaining industry-recognized quality and consistency.”

Harold Hamm, Chairman of the Board of Continental Resources and Founding Member of the American Gulf Coast Select Best Practices Task Force Association said on April 20 last year, when the Cushing, Oklahoma WTI contract traded down to -$38, it was a wake-up call to the oil industry that the storage constraints and landlocked location of the Cushing contract could no longer be ignored.

"I started the American Gulf Coast Select Best Practices Task Force to develop specifications for a new US light sweet crude oil price benchmark in the American Gulf Coast, and to advocate for its implementation and adoption as the main pricing point for the US oil markets," he said.

"We think a futures contract in the most interconnected market center in the country, with a widely accepted quality spec, which settles with guaranteed delivery of crude oil is an important new alternative for the industry. The task force has worked tirelessly to create a marker with transparency and liquidity that is waterborne for this modern era. The Midland WTI American Gulf Coast futures contract ... is a huge step forward for the industry and goes a long way to accomplishing the mission on which the task force has been working.”

Brent Secrest, Executive Vice President and Chief Commercial Officer of Enterprise’s general partner, said: “We are excited about this new crude oil futures contract, which features the combined strength of two extensive and complementary networks of midstream assets with a world-class trading platform to provide customers with greater supply reliability, flexibility and price transparency. 

As the market hub for Permian Basin production, Houston represents the most logical choice for a new futures contract. Between Magellan and Enterprise, we offer access to virtually all of the export capacity in the Houston region, redundant connectivity to all area refineries, a robust Gulf Coast storage position and interconnects to all of the relevant supply pipelines, including those owned by third parties.”

Jeff Barbuto, Global Head of Oil Markets at ICE, said combining efforts with Magellan and Enterprise to establish a benchmark for pricing Midland quality WTI on the Gulf Coast allows it to offer the industry a futures contract with over four million bpd of supply capacity from Midland into Houston, access to both domestic and foreign demand, and nearly 60 million barrels of storage capacity in the Magellan and Enterprise systems. 

"Traded on the same global platform as ICE Brent, Murban and Platts Dubai Crude Oil futures contracts, the new Midland WTI American Gulf Coast contract can also offer significant capital efficiencies to the industry and provide industry-leading quality that buyers have grown accustomed to in the Houston market," he said.

According to EIA forecastsglobal consumption of petroleum and liquid fuels will average 97.7 million bpd for all of 2021, a 5.4 million bpd increase from 2020. US crude oil production averaged 11.2 million bpd in March, up 1.4 million on February. 

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