Shell buys Ubitricity but "charging challenges remain"
Royal Dutch Shell has bought Ubitricity for an undisclosed fee, signalling its acceleration into the EV market as the oil giant strives to be net zero by 2050.
Ubitricity operates more than 2,700 public charging points, providing Shell with significantly enhanced capacity - it currently operates around 100 at its service station forecourts - and marking its first major move into the EV sector since its acquisition of NewMotion in October 2017.
Oliver Shaw, CEO at Kalibrate, said the deal was a significant step for the market but the challenge remains making charging points universally accessible. "Building an EV charging network doesn’t happen overnight; it will require a significant investment to make it possible and, more importantly, a deep understanding of where these charging points need to be placed to make EV ownership more appealing to all of society," he said.
Once an optimised and operational EV network is in place, forecourts will need to introduce supplementary services, like somewhere where consumers can check emails or social media, or have a quick meal or coffee, he added.
The UK’s first electric forecourt, in Braintree, goes some way to plugging this issue, as it provides drivers with somewhere to charge their car and access quality services and food - and with its network of forecourts and shops, this may be an area where Shell can make clear in-roads. Rivals bp bought Chargemaster in June 2018.
“Fuel retailers, petrol forecourts and global oil giants are now consolidating their services," said Shaw.
"Asda and the Issa brothers have bet their whole business model on fuel and convenience in one place, while in the US 7-Eleven's purchase of Speedway is yet another indication of the future where services are consolidated under one roof. Developments like this show us that the future of automotive and EVs is bright, but we have a long way to go yet before they are a viable option for all."
Another major challenge in the EV arena is providing enough battery capacity to keep up with spiralling demand. The UK alone needs seven 'gigafactories' by 2040 and supply chains must be finalised within five years to avoid high EU export tariffs.
Magellan, Enterprise and ICE unveil new futures contract
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 forecasts, global 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.