Nov 30, 2020

Ofgem approves SGN hydrogen homes project in Scotland

Hydrogen
scotland
Zeroemissions
Dominic Ellis
3 min
Work will now begin on delivering the 100 percent hydrogen demonstration network in Fife, that will bring carbon-free heating to around 300 homes
Work will now begin on delivering the 100 percent hydrogen demonstration network in Fife, that will bring carbon-free heating to around 300 homes...

SGN has announced H100 Fife - a project designed to heat homes with 100 percent green hydrogen - has received Ofgem approval. 

The energy regulator will award up to £18 million from its annual Network Innovation Competition to support development of the new hydrogen network, triggering a further investment of £6.9m from the Scottish Government. SGN shareholders and Britain’s three other gas distribution networks are also providing funding for the project, according to a statement.

Work will now begin on delivering the full-hydrogen demonstration network in Levenmouth, Fife, that will bring carbon-free heating and cooking to around 300 homes from the end of 2022.

The project will provide compelling evidence of hydrogen’s performance in a real-world domestic setting as a zero-carbon energy source, as the Scottish and UK Governments look to reduce greenhouse gas emissions to net zero by 2045 and 2050 respectively.

The clean gas will be produced locally, by a dedicated electrolysis plant powered by a nearby offshore wind turbine. The project will be the first of its kind to use a direct clean power supply to produce hydrogen for domestic heating.

“We’re delighted that stakeholders have recognised the critical importance of H100 Fife,” says Angus McIntosh, our Director of Energy Futures. “H100 Fife is the UK’s priority project in this area and is designed to demonstrate hydrogen distribution and in-home performance in a real-world setting.

“It’s an exciting opportunity to revolutionise the way millions of people heat their homes. The hydrogen appliances will connect to the existing pipes in the home for zero carbon heating and cooking with minimal disruption and with no need to replace existing radiators or plumbing.”

“The high level of ambition shown by bidders in this year’s Network Innovation Competition is hugely encouraging and shows the energy industry getting behind the challenge of net zero,” says Jonathan Brearley, Ofgem’s Chief Executive.

 “The winning projects were those which showed the most potential to make the game-changing leaps in technology we need to build a greener, fairer energy system at the lowest cost to consumers.

“Ofgem will continue to back the best of innovation, which will help drive the green recovery and enable consumers to reap the benefits up to 2050 and beyond.”

Replacing natural gas with hydrogen and other low-carbon alternatives will be key if the UK and Scottish Governments are to meet legally binding net zero emissions targets. 

H100 Fife is a critical first step as the UK aims to develop 5GW of hydrogen production capacity and a first “Hydrogen Town” by 2030. The project was singled out by the Prime Minister during the launch of the UK Government's Ten Point Plan for a Green Industrial Revolution, in addition to receiving support from Ofgem and the Scottish Government.

Customers in Fife will be given the chance to participate in the world-first demonstration.  Any customer that opts-in to the project will receive a free hydrogen connection, free replacement hydrogen appliances and free maintenance over the length of the project. They will pay the same amount for hydrogen gas as they would pay for natural gas. 

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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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