July 1, 2009
CME to Launch Physical NGL Futures Cleared Using OPIS Spot Prices
Six new physically delivered natural gas liquids futures are expected to start trading and clearing through the exchange's Clearport system later this month. The launch of the products had been expected some time this summer.
Additionally, the exchange saw the first trades of new ethylene futures launched in June.
Trading of the new products will start on July 19, for trade date July 20, an exchange release said. The new futures contracts include: Mt. Belvieu physical LDH propane (OPIS) with delivery at the LDH facility in Mont Belvieu, Texas; Mt. Belvieu physical non-LDH propane (OPIS); Mt. Belvieu physical normal butane (OPIS); Mt. Belvieu physical natural gasoline (OPIS); Mt. Belvieu physical isobutane (OPIS); and Mt. Belvieu physical ethane (OPIS). The Non-LDH propane contract as well as the other four physical NGL contracts will be delivered at the Enterprise facility in Mt. Belvieu.
The contracts are listed for trading by NYMEX through CME ClearPort and are subject to NYMEX rules and regulations.
The first listed month will be August 2009. Both propane futures contracts will be listed for 48 consecutive months. The other contracts will be listed for 36 consecutive months. The contracts will be for 42,000 gallons or 1,000 bbl of product.
On initial reaction, traders thought the new contracts would be good for the gas liquids markets. "I think from a pure liquidity standpoint, it will be good," said one trader.
He thought the contracts would find interest especially from firms that have difficulty getting credit from counterparties. The over-the-counter gas liquids markets have turned to exchange-cleared contracts as the credit markets have tightened and some firms have had letters of credit revoked. Indeed, the CME saw rapid adoption of gas liquids futures swaps (which are financial
transactions) by the industry. Those contracts were launched in November 2008.
In a related development, on Tuesday, the exchange recorded the first trade of new physically delivered ethylene futures that began trading June 15. The first deal was for 50 contracts and today, the exchange witnessed the exchange of 150 contracts, said an exchange source.
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June 10, 2009
EPA Weighing Requests to Extend Comment Period on Proposed Rules for RFS2
U.S. EPA has received at least two formal requests to extend the 60-day
comment period on its proposed rules to implement the expanded renewable fuels
standard (RFS2), citing the complicated and voluminous rulemaking analysis that
accompanied the proposal. However, it doesn't appear as if EPA is prepared to
rule on those requests just yet.
As passed under the 2007 energy bill, the 36-billion gal/yr RFS2 is broken
into four segments: a capped corn-based ethanol requirement of 15 billion
gallons by 2015; 21 billion gallons of the overall mandate contains "advanced
biofuels" by 2022, with 16 billion gallons of that amount, under the same
timeframe, from cellulosic biofuel. For the fourth carve-out, up to 1 billion
gallons by 2012 is required to be from biomass-based diesel.
Meanwhile, conventional biofuels would be required to emit 20% fewer
lifecycle greenhouse gas emissions compared to gasoline, while "advanced
biofuels" and biomass-based diesel would be required to emit 50% fewer
lifecycle greenhouse gas emissions, and cellulosic biofuel would be required to
emit 60% fewer emissions.
EPA released its notice of proposed rulemaking for RFS2 on May 5, and began
receiving public comment on the proposal on May 26. Comments are due by July 27.
"The issues in this proposal are numerous and several are controversial,"
officials from the American Petroleum Institute (API) and the National
Petrochemical & Refiners Association (NPRA) wrote to EPA Administrator Lisa
Jackson on June 5. "EPA has rightly taken 18 months since the enactment of
the... [2007 energy bill] to analyze many of these controversial issues. It is
not reasonable, however, for EPA to expect stakeholders to review, understand
and submit constructive comments on these complex issues within 60 days," the
two associations wrote.
In their letter, API and NPRA asked EPA for the comment period to be
extended by 60 days. The letter was not publicized, but API's Al Mannato
mentioned the letter during testimony he gave yesterday during EPA's public
hearing on the expanded RFS.
During the hearing, Mannato also said he didn't believe EPA could meet the
agency's Jan. 1, 2010 implementation date for the expanded RFS, given the
complex issues involved in this rulemaking. In response to a question from
EPA's Margo Oge, Mannato clarified that API is not against the Jan. 1, 2010
start date. "If the agency, by some miracle, can get it done by then, we don't
oppose the deadline. We just don't think it's realistic," he added.
Meanwhile, last month, 24 members of the House Agriculture Committee wrote a
similar letter to EPA, but requested a 120-day extension on the comment
period. "We believe that the current 60-day comment period does not provide
sufficient time for the public to review the 549-page notice of proposed
rulemaking and 822-page regulatory impact analysis, nor does it allow adequate
time for people to prepare their comments," the members wrote to EPA. "The
future of our biofuels industry is too important to rush on such important and
critical issues as what constitutes a renewable biomass feedstock and how to
consider indirect land use changes," the letter added.
During opening remarks of EPA's public hearing on Tuesday, Oge acknowledged
that the agency had received requests to extend the comment period, but said
EPA "had not decided yet on how to proceed on that request."
On a related note, EPA recently extended by 60 days its public comment
period on a request to allow for higher ethanol blends up to 15%. Comments are
now due July 20.
OPIS’ recent webinar, RFS-2: Understanding The Proposed New Rules, is available for download.
Learn everything you need to know about EPA’s changes to the Renewable Fuel Standard in just 90 minutes. Hear from four of the industry’s leading renewable fuels authorities -- including John Weihrauch from the U.S. EPA. Go here now for program details and to download your copy now!
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April 27, 2009
Refiners' Share of Free Carbon Credits too Small: API
The long anticipated energy and climate change bill from Congressional
Democrats has emerged as one even more challenging to the oil industry than
many expected.
The biggest issue of the American Clean Energy and Security Act (HR 2454)
for oil refiners currently is the allocation of free carbon emissions
allowances in the early years of legislation intended to promote U.S. energy
independence and security and cut global warming pollution at the same time.
Under the bill's proposed "cap and trade" system, 15% of carbon dioxide
emissions permits are to be auctioned off beginning in 2012, with the remaining
85% apportioned to industries to ameliorate the higher costs of producing fuel
in a way that emits less of the greenhouse gas.
Industry advocates had lobbied the House Energy and Commerce committee,
whose chairman Henry Waxman (D-Calif.) co-sponsored the bill with Subcommittee
chairman Edward Markey (D-Mass.), to designate 30% of the available allowances
to go to oil refiners but wound up with only 2%. The free allowances would be
phased out over 10 to 15 years.
The bill calls for a 3% reduction in greenhouse gas emissions from 2005
levels by 2012 and cuts of 17% by 2020, 42% by 2030 and 83% by 2050.
The course of the bill, introduced on Friday, is expected to be swift. The
committee moves to mark-up today, May 18, and plans to complete its
consideration before the Memorial Day recess.
The American Petroleum Institute has protested the allocation among
industries, calling it "inequitable" and claiming it will have a
disproportionately adverse impact on consumers and fuel producers.
In a system that has Congress giving away some emissions and selling
others, "if an industry is held responsible for 10%, they should get 10% in
allowances," API President Jack Gerard told reporters in a conference call
Monday.
"Congress should not be picking winners and losers," he said.
Under the proposal, electricity and natural gas distribution companies will
get 30% and 9%, respectively, of the allowances to protect consumers from price
rises. They'll be phased out after 2025. "Energy-intensive, trade-exposed
industries" such as steel, cement and aluminum will get 15% and also be phased
out after 2025 unless the president determines the program is needed longer.
"Petroleum-based fuels are used by everyone," Gerard said, and the proposal
fails to recognize oil's contribution now and in the future, a notion also
borne out in the federal budget's repeal of tax incentives for U.S. oil and gas
producers.
"There's an impression out there that we can flip a switch and move to other
fuels," he said. Analogizing the country's transition away from petroleum to a
home renovation, Gerard urged Congress not to "blow up the foundation while
making it more efficient."
"The reality is that oil and gas continue to play a dominant role and that
needs to be reflected in legislation," he said.
Gerard didn't quantify a percentage figure that would be more equitable, nor
did he offer his estimate of the cost of refiner compliance with greenhouse gas
reduction measures under the current cap and trade proposal. He noted one study
by the politically conservative Heritage Foundation that said a cap and trade
system could raise gasoline prices as much as $1.70/gal at the pump.
While acknowledging the industry doesn't have the influence with the White
House that it did under George W. Bush, Gerard said he was pleased with the
adjustments Waxman had made to the bill so far and he hoped that
his "articulations will influence others."
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April 27, 2009
OPIS Ethanol Prices Now on Spot Ticker
Oil Price Information Service has just made it easier for you to have access
to ethanol spot prices in eight major U.S. bulk markets.
Effective Monday, April 27, OPIS added daily spot prices for the New York
Harbor, U.S. Gulf Coast, Los Angeles, San Francisco, Dallas, Tampa, and Phoenix
and twice daily quotes for the Chicago ethanol market -- a key pricing point
for many outlying markets.
The exclusive OPIS Spot Ticker is an interactive tool that allows you to see
prices from any computer connected to the internet.
OPIS will continue to make the spot ethanol prices available in other
current formats, but by adding the prices to the OPIS Spot Ticker, customers
now have an easily accessible format to compare spot ethanol prices with OPIS
spot prices for gasoline, diesel, jet fuel, and other finished products.
OPIS has been covering spot ethanol prices for much of its information
history via products like its weekly "Ethanol & Biodiesel Information Service"
plus daily e-mail services updating spot ethanol prices and daily RINs prices.
"The addition of ethanol to our Spot Ticker is in response to a growing need
among our customers for timely price discovery of this blendstock. It is
indicative of the expanding role ethanol is playing in the nation's motor
gasoline pool," said OPIS President Brian Crotty.
One of the most liquid cash ethanol markets is Chicago. With Chicago ethanol
spot prices updated two times a day, OPIS customers will be able to quickly
determine if ethanol market prices are changing with other finished products.
Ethanol spot prices will be displayed just below the window showing gasoline
and diesel prices. In addition to a flat price in U.S. cents per gallon for
ethanol, the display will indicate how much prices have changed since the
prior update.
"The new information on the OPIS Spot Ticker will allow blenders a unique
view of the ethanol market as it
changes and provides a vital tool for
calculating how the changes impact ethanol's blend-value with gasoline,"
Crotty
said.
The OPIS Spot Ticker allows customers across the U.S. to see how physical
spot prices are performing relative to changes in the NYMEX futures markets.
OPIS editors are constantly updating "basis differentials," a vital piece of
information linking futures prices to physical spot prices for gasoline,
diesel, and jet fuel.
With the advent of ethanol spot prices in the eight major bulk ethanol
markets, OPIS Spot Ticker customers are now able to view the full slate of
products used for gasoline across the county in an easy-to-use, easy-to-read
web enabled format.
April 24, 2009
CARB Adopts Low Carbon Fuel Standard; Maintains Iluc For Biofuels
By a 9-1 vote, the California Air Resources Board (CARB) voted late yesterday to approve its much-touted low carbon fuel standard (LCFS), one of the world's first global warming standards for transportation fuels.
The goal of the LCFS, released for comment last month, is to reduce greenhouse gas emissions from the transportation sector in California by about
16 million metric tons (or 10%) in 2020. The provision is phased is in beginning in 2011, requiring refiners, importers and blenders to ensure that the fuels they provide for the California market meet an average declining standard of carbon intensity. They can either blend or sell an increasing amount of low-carbon fuels; use emissions credits that they have banked; or purchase credits from other fuel providers.
Starting in 2011, gasoline and fuels substituting for gasoline would require a 0.25% reduction in carbon intensity, ramping to 0.5% in 2012, 1% in 2013 and growing to 10% in 2020 and subsequent years.
Among the current carbon intensity values that CARB agreed to:
Gasoline:
--CARBOB gasoline based on the average crude oil delivered to California refineries and average California refinery efficiencies is assigned direct emissions of 95.86 gCO2e/MJ
--CaRFG-CARBOB and a blend of 100% average Midwestern corn ethanol to meet a 3.5% oxygen content by weight (approximately 10% ethanol) is assigned direct emissions of 96.09 gCO2e/MJ
--CaRFS-CARBOB and a blend of 80% Midwestern corn ethanol and 20% California corn ethanol to meet a 3.5% oxygen content by weight blend (approximately 10% ethanol is assigned direct emissions of 95.85 gCo2e/MJ
Ethanol:
--Midwest average, 80% dry mill, 20% wet mill, dry DGS is assigned direct emissions of 69.40 gCO2e/MJ
--California, dry mill, wet DGS, natural gas is assigned direct emissions of 50.70 gCO2e/MJ
--California average, 80% Midwest average, 20% California, dry mill, natural gas is assigned direct emissions of 65.66 gCO2e/MJ
--Midwest, dry mill, dry DGS is assigned direct emissions of 68.40 gCO2e/MJ
--Midwest, wet mill is assigned direct emissions of 75.10 gCO2e/MJ
--Midwest, dry mill, wet DGS is assigned direct emissions of 60.10 gCO2e/MJ
--California, dry mill, dry DGS, natural gas is assigned direct emissions of 58.90 gCO2e/MJ
--Midwest, dry mill, dry DGS, 80% natural gas, 20% biomass is assigned direct emissions of 63.60 gCO2e/MJ
--Midwest, dry mill, wet DGS, 80% natural gas, 20% biomass is assigned direct emissions of 56.80 gCO2e/MJ
--California, dry mill, dry DGS, 80% natural gas, 20% biomass is assigned direct emissions of 54.20 gCO2e/MJ
--California, dry mill, wet DGS, 80% natural gas, 20% biomass is assigned direct emissions of 47.44 gCO2e/MJ; and Ethanol from sugarcane
--Brazilian sugarcane using average production processes is assigned direct emissions of 27.40 gCO2e/MJ.
The proposal does not specifically address fuel specifications for biodiesel, renewable diesel or E85, but said they expect new specifications to be developed in the future.
Meanwhile, both the draft and final provision of CARB's LCFS opted to quantify indirect land use changes (ILUC) for biofuels--and no other fuels-- much to the chagrin of the biofuels industry.
Specifically, the ruling gives a 30 point increase in the carbon intensity involved in the ILUC for each type of corn-based ethanol and a 46 point increase in the carbon intensity involved for ethanol from sugarcane. During the public comment period, biofuel supporters urged CARB to not adopt the ILUC requirements until all the science and modeling was completed, and to ensure a level playing field for all transportation fuels. Similar comments were reiterated late last night and this morning, in response to CARB's ruling.
"Adopting this standard sets a dangerous precedent about the application of unproven science to industries across the country," said Renewable Fuels Association President Bob Dinneen. "This standard is based on flawed analysis and selectively enforced penalties against biofuels only. In unfairly penalizing ethanol, ARB is relegating California to more petroleum use as biofuels are the only viable alternative liquid fuel," he added.
"We're disappointed with the Board's vote," added General Wesley Clark, co- chairman of Growth Energy. "This was a poor decision, based on shaky science, not only for California, but for the nation," he added.
In its final proposal, CARB said that "[b]ased on its work with university land use change researchers, however, ARB staff has concluded that the land use impacts of crop-based biofuels are significant, and must be included in LCFS fuel carbon intensities. To exclude them would allow fuels with carbon intensities that are similar to gasoline and diesel fuel to function as low- carbon fuels under the LCFS. This would delay the development of truly low- carbon fuels, and jeopardize the achievement of a 10% reduction in fuel carbon intensity by 2020," CARB noted.
CARB also said it considered taking no action on the state level and instead deferring to the federal renewable fuels standard (RFS), which includes a reduction in lifecycle greenhouse gas emissions. "The federal RFS is an important complementary strategy to California's RFS. However, the federal RFS would deliver only about 30 to 40 percent of the GHG benefits of the proposed regulation, and does little to incentivize the development of fuels such as natural gas, electricity or hydrogen," CARB noted.
Meanwhile, CARB plans to form a working group to review the indirect land use effects in 2011.
For more information, visit:http://www.arb.ca.gov/regact/2009/lcfs09/lcfsisor1.pdf
Understand the Transportation Fuels Policy Change Under President Obama webinar is now available for immediate download. In just 90 minutes, you’ll discover exactly what impact the new Administration’s proposed changes will have on your business. Go here for program details and to download your copy now. |
March 23, 2009
Obama Touts Clean Energy Provisions in Budget Proposal
President Barack Obama reiterated this afternoon that the U.S. needs to
pursue clean sources of energy to help wean the country off of its dependence
on foreign oil.
Speaking to a group of clean energy entrepreneurs at the Eisenhower
Executive Office Building, Obama praised the officials for their
innovativeness. "It's said that necessity is the mother of invention. At this
moment of necessity, we need you. We need some inventiveness. Your country
needs you to create new jobs and lead new industries. Your country needs you to
mount a historic effort to end once and for all our dependence on foreign oil,"
said the president.
"And in this difficult endeavor -- in this pursuit on which I believe our
future depends -- your country will support you. Your president will support
you," Obama said.
The remarks come as Obama ramps up congressional pressure to pass his 10-
year, $3.6 trillion budget proposal, which he introduced last month. According
to a White House backgrounder released this morning, the budget proposes nearly
$75 billion to make the Research and Experimentation Tax Credit permanent,
stimulating private-sector investment in R&D.
During his speech today, Obama also touted the clean energy provisions in
the administration's recently enacted $787 economic stimulus package, including
$39 billion in energy investments at DOE and $20 billion in tax incentives for
clean energy.
"We have a choice. ... We can leave these problems for the next budget or
the next administration, but more likely for the next generation," said
Obama. "We can remain the world's leading importer of foreign oil, or we can
become the world's leading exporter of renewable energy. We can allow climate
change to wreak unnatural havoc, or we can create jobs preventing its worst
effects. We can hand over the jobs of the 21st century to our competitors, or
we can create those jobs right here in America. We know the right choice," he
added.
Obama plans to continue pressing his budget proposal during a prime-time
televised speech on Tuesday evening.
However, the budget faces congressional obstacles. Republicans view the
budget as imposing massive tax increases. "It's disturbing that the president
is calling for a national energy tax that will destroy jobs and wreck family
budgets, and even more disturbing that White House officials have identified
this national energy tax as a non-negotiable presidential priority. We need a
better solution, and Republicans will offer one," said House Minority Leader
John Boehner (R-Ohio).
"Washington Democrats are making all the wrong moves when it comes to
getting our economy back on track. They should work with Republicans on a
budget that will help rebuild savings, create jobs and get the government's
fiscal house back in order. The president's budget will harm our economy and
destroy jobs by spending too much, taxing too much and borrowing too much.
Republicans will offer a better budget solution in the days to come, and we
hope the president and his Democratic colleagues will give it the consideration
it deserves," Boehner added.
Preliminary volumes for the first day of trading were not yet available by presstime.
Understand the Transportation Fuels Policy Change Under President Obama webinar is now available for immediate download. In just 90 minutes, you’ll discover exactly what impact the new Administration’s proposed changes will have on your business. Go here for program details and to download your copy now. |
October 3, 2008
Pilot to Add Urea to 100 Truckstops Next Year
Truck-stop giant Pilot will begin offering urea to truckers at 100 of its
locations around the U.S. starting mid-year 2009, the company said this week.
Urea, or Diesel Exhaust Fluid (DEF), will be required by 2010 model year
trucks in order to replenish their Selective Catalytic Reduction (SCR) exhaust
systems.
Fleets see SCR as the best of several competing clean air technologies
proposed for meeting EPA's goal of near-zero emission of particulate matter, a
smog-producing pollutant from diesel exhaust. It not only results in cleaner
exhaust it also improves fuel mileage, sources say.
"Pilot's decision to offer [DEF] 'at the pump' will maximize affordability
and convenience for truckers and is one of the final infrastructure elements to
be in place for truck fleets and owner-operator customers planning to use SCR
emissions control technology to meet 2010 emissions standards," Pilot said.
The Knoxville, Tenn.-based chain will also offer pre-packaged, top-off
quantities for SCR-equipped trucks. Because 2010 trucks will also carry EPA-
mandated on-board diagnostic systems, trucks will slow to a crawl if they run
out of DEF on the road, according to Oliver Dixon, an analyst with Automotive
World, who recently spoke at OPIS' Fleet Fueling Conference & Exhibition in
Atlanta.
Fleets may also choose to buy their own DEF and store it at their bulk
terminals, sources say.
DEF poses risks, however, if it is mishandled. Because it is an aqueous
product, it may cross-contaminate diesel fuel and plug filters. Driver training
will be needed. There are freezing point issues, as well, requiring special
handling in cold climates.
Beginning next year, fleets will have to start buying Urea/Diesel Exhaust Fluid (DEF) to feed their new model trucks’ catalytic systems both at their terminals and as they fuel at truckstops. Find out how to turn this new requirement into a profit center for truckstops and a mileage saver for fleets by downloading the OPIS Understanding & Benefiting from Urea/Diesel Exhaust Fluid Requirements webinar rebroadcast! Learn the
ins-and-outs of this new technology from three of the industry’s leading experts. Go here to download the rebroadcast now! |
August 5, 2008
OPIS Introduces New Calendar-Day Rack Average
OPIS has just introduced a new rack benchmark pricing average that enables
fuel buyers and sellers to capture in a single number a complete snapshot of
the entire day's rack price changes - 12:00 a.m. (midnight) - 11:59 p.m.
Called the "OPIS Calendar-Day Average" the new pricing data point provides a
comprehensive pricing summary of same-day rack price averages for the nearly
400 wholesale cities where gasoline and diesel fuel prices are reported by OPIS.
The OPIS Calendar-Day Average made its debut August 1, 2008.
The critical point that OPIS makes in unveiling the new price is that it
includes price changes made after 6:00 p.m., which helps customers more
efficiently balance the cost of their product with sales prices quoted for new
or existing downstream business.
The new Calendar-Day Average benchmark is in addition to the already
existing OPIS Contract Average and the OPIS Closing Average, key pricing
snapshots that many OPIS customers already use as market standards for buying
and selling fuel.
Market volatility continues to reshape the way wholesale business is being
transacted and the manner in which product is being priced. The new OPIS
Calendar-Day Average meets the critical need of customers who want to be able
to capture 6:00 p.m. prices in the same day, and not have to wait until the
contract average of the next day to price out product.
"This new data set was requested by our customers in response to increase
wholesale price volatility," said OPIS President Brian Crotty. "We are
delighted to be able to provide this information for their benefit."
In a letter to customers announcing the introduction of the new Calendar-Day
Average, OPIS pointed out that the new price will be easily integrated into
existing customer pricing formats. Customers will have the option of receiving
the new average. They may elect to change or customize their current rack
pricing file to accommodate the latest OPIS benchmark number.
Get connected to the most reliable rack price discovery source available. OPIS tracks almost 400 wholesale rack locations every day. Go here or call 888-301-2645 to start your 5-day, no-obligation free trial to the most relied-upon U.S. fuel price benchmark. |
