The Federal Energy Regulatory Commission (FERC) made headlines after it issued a record fine of $453M against Barclays PLC and several of its power traders. FERC stated that the bank manipulated energy prices in California and other western markets between November 2006 and December 2008. The agency is also working towards a similar settlement with J.P. Morgan Chase.
When I read the news, the dollar amount of the fine wasn’t what resonated. The fact that it was issued for manipulation that began over 7 years ago did. FERC doesn’t have to abide by a statute of limitations, and other agencies often use revisions to extend any that do exist. Energy traders are exposed to heightening levels of regulatory risk with every passing day, and FERC may be the least of their concerns.
The introductions of Dodd-Frank, EMIR, MIFID, and REMIT, among others, have elevated complexity in U.S. and E.U. power and gas markets. Rules within each regulation continue to evolve, making it extremely difficult to interpret them. Traders cannot keep up. The task of capturing necessary information and knowing where to send it becomes more convoluted as more parties become involved in each transaction and the number of transactions processed increase. The only effective means to ensure compliance is to partner with an energy trading and risk management (ETRM) provider to implement a regulatory solution.
Triple Point Technology’s ETRM, Commodity XL, has dedicated modules to meet the stringent requirements of Dodd-Frank and regulations in the E.U. Triple Point also employs dedicated experts to remain vigilant in proactively developing and adapting its enterprise software to meet the demands of regulators so your company can focus on making profitable trading decisions. Contact us at [email protected] to learn more.
A sustained boom in natural gas recovery has shifted conversations in the United States from speculation about shortages and price hikes to decisions on how much should be exported. Studies continue to locate proven reserves and natural gas companies are vying for permission to build facilities to create liquefied natural gas (LNG) and export it to non-U.S. customers. Of the 20 federal permit applications that have been submitted to the Energy Department, only two (Cheniere Energy Inc., and Freeport LNG Expansion L.P.) have received approval. However, recent actions and statements made by the Obama administration suggest that more will be approved soon.
Companies given the go ahead will need to determine if the upfront billion dollar cost and time required to build a liquefaction/export facility is worthwhile. In the last few years alone, the U.S. has seen average prices of natural gas range from as little as $2.66 to nearly $8 per MMBtu. While Asia and Europe have seen double digit pricing during that time, it is difficult to predict what will happen as markets gain access to additional supply.
Regionalized natural gas markets are already volatile. Changes in weather, unexpected problems with transport/refining equipment, and political events/policies can all drastically affect supply and demand. The vast amount of LNG set to enter foreign markets will increase uncertainty, and make it harder to navigate risk. Market participants and energy companies must be able to mitigate the risks of trading on a global scale.
Triple Point Technology’s energy trading and risk management (ETRM) software, Commodity XLTM, offers the best path to success. End users can accurately and efficiently monitor physical commodity movements and price changes, and configure a customized dashboard to display trade information and risk positions across transactions and markets. Click here to read more about Commodity XL for Gas.
European energy markets continue to experience change that will prevent power and gas companies from putting their eggs in the same old baskets. Ongoing developments have exposed the shortcomings of legacy software applications that are no longer capable of effectively calculating risk or optimizing trading activity.
Commodity Now’s latest white paper, Managing the European Energy Equation, written by publisher Guy Isherwood, discusses the adversity that companies have encountered in Europe’s power and gas markets. Uncertainty has made trading in product isolation obsolete, and participants are challenged with managing multiple commodities while struggling to meet the demands of evolving regulations.
Read the full story and learn more about the opportunity that exists in the pan-European market for companies that partner with Triple Point Technology for an energy trading and risk management (ETRM) software solution to navigate newfound volatility and risk.
Triple Point’s Commodity XL™ offers the best path to success in Europe’s power and gas markets. It is an advanced ETRM system that provides real-time physical supply chain management, risk management, and optimization of energy trading strategies for multiple commodities, while capturing the information necessary to meet regulatory requirements.
I would be hard-pressed to cite a manufacturing process that didn’t inevitably lead to the co-manufacture of some form of waste. Throughout history, successful companies have developed creative ways of breathing new life into those by-products. When Henry Ford, of Ford Motor Company, began his assembly line production of Model T’s; he discovered that scrap wood pieces could be used to manufacture charcoal. That discovery not only repurposed the wood but allowed Ford to earn additional profit and ultimately spinoff the business. Today, Kingsford Products Company remains the leading U.S. charcoal manufacturer.
In the same vein, Natural Gas Liquids (NGLs) have proven to be valuable by-products of crude oil and natural gas. The raw mix (Y-Grade) gas that remains as part of the refining process does not have a price index and is considered waste, but the individual hydrocarbons comprising the mix are profitable. The process of fractionation yields ethane, propane, isobutane, butane, and pentane which are priced and actively traded throughout the world. They are considered key components of chemical and plastic manufacture, and the heavier hydrocarbons are used as fuel.
The boom of shale oil and gas production in the United States has left the country with a surplus of NGLs. Asked a decade ago; no analyst would have surmised that the U.S. would be poised for becoming the world’s largest exporter of any fossil fuel, but an increase in global demand has set the stage for it to happen. The energy market is always changing and remains highly unpredictable.
The demand for NGLs is growing and now is the time to develop a strategy to profit from market movements. Companies seeking to enter the NGLs arena need to be aware of the many factors affecting the process of isolating the individual components of Y-Grade, potential yields, and ultimately bringing the end products to market.
Triple Point Technology’s solution offers a comprehensive Energy Trading and Risk Management (ETRM) system with the unique capability of providing physical supply chain management, risk management, and optimization of energy trading strategies on a single platform. Commodity XL provides companies with the tools necessary to interpret complex data that is paramount to understanding the complicated relationships that exist in today’s NGLs market. Click here to learn more about Triple Point’s software.
The gas in our cars, cleaning chemicals in our cabinets, and reusable cups from which we drink our coffee or tea all have ties to the crude oil industry. As feedstock for a wide array of goods, crude oil and crude products are among the most widely traded commodities in the world. The market attracts diverse participants; however, many of the challenges faced are universal.
CommodityPoint’s latest white paper, “Global Oil Markets- Increasing Uncertainty and Risk,” highlights several of these challenges and concludes that now is the time to invest in an advanced energy trading and risk management (ETRM) software solution to combat rising volatility.
This white paper discusses how the political unrest affecting many of the world’s crude-producing regions is having a direct effect on oil supply. Tensions in the Middle East threaten to shut down the busiest port in the region, which could interrupt the delivery of 17MMbbl/day. Should this situation come to fruition, market volatility will be further exacerbated, and those companies that are not properly equipped to manage it will suffer.
While the threat of a continued reduction in crude supply looms, crude demand continues to grow each year. CommodityPoint’s paper suggests the only way to effectively navigate the market fluctuations caused by scenarios such as this is to implement a sophisticated trading solution that can not only capture, manage, and value trades and hedge positions; but that can also model the entirety of the physical operations of market positions. Read the paper now and find out why it’s imperative to have an ETRM solution such as Commodity XL™ that provides an integrated, real-time view of physical and financial exposure alongside operational, credit and regulatory risk exposure.
Download the CommodityPoint white paper