Triple Point received the prestigious “ETRM Software House of the Year” from Energy Risk magazine this week at an awards dinner held this past week at the Energy Risk USA conference in Houston. Triple Point was selected as the winner because of its revenue, profit, and customer growth in 2012 along with its unique ability to deliver innovative, next generation commodity trading and risk management (CTRM) solutions including mobile applications.
In 2012 Triple Point grew its revenue by 30% and its profit by 40%, and added 28 new energy companies to its base of 400+ customers including Spanish power generator Iberdrola Generation, Korean-based oil refiner and marketer SK Energy, Brazil energy giant Petrobras, and China National Offshore Oil Corporation (CNOOC) Limited.
Energy Risk also named Triple Point “Software House of the Year – Asia” in 2012. In addition, Triple Point has been named a Leader by two top analyst firms – by IDC in its 2013 IDC Marketscape: Energy Trading and Risk Management (ETRM) Vendor Assessment, and for four straight years by Gartner in its Magic Quadrant for ETRM Platforms.
When accepting the award on behalf of Triple Point, Sr. Vice President and Chief Marketing Officer Michael Schwartz emphasized that what makes Triple Point successful is the people behind the software, who are committed to delivering unsurpassed value.
Just a few years back, there were many articles discussing “Peak Oil” and whether the world had already passed the peak. A typical headline was one in Fortune Magazine in 2008 with a headline predicting a dramatic increase in oil prices – “Here comes $500 oil.”
At the recent HIS CERA Week, it was reported that “Peak Oil” was already a distant thought for most presenters, and that much of the talk was about growth in natural gas and oil from unconventional shale resources in the U.S.
According to the U.S. Energy Information Administration (EIA), crude oil production in the U.S. exceeded an average seven million barrels per day (bbl/d) in November and December of 2012, the highest volume since December 1992.
The International Energy Agency (IEA) predicts that the United States will overtake Saudi Arabia and Russia to become the world’s leading oil producer by 2017.
The WSJ MarketBeat Blog notes we are only at the beginning. “U.S. tinkerers discovered a way to extract oil and gas from shale, the source rock for oil and gas that was previously deemed uneconomical. That has boosted U.S. production to levels not seen in two decades, and that’s only the beginning: shale recovery factors could improve, and vast shale formations in Argentina, China, Russia and other countries are yet to be tapped. If technology ever allows the industry to recover 70% of oil from conventional reservoirs and to double or triple the current recovery rate from unconventional resources, the world could almost quadruple the reserves of global liquids.”
In addition, Iraq passed a critical milestone last year by producing three million barrels a day of crude oil for the first time since before the Persian Gulf War, reaching a high of 3.4 million bbl/d in December. Given its access to vast reserves at low costs, Iraq could play a significant role in the growth of energy supply. Of course, in Iraq there is much geopolitical risk attached to supply.
Even with increased production, there was still not enough oil to meet demand in the beginning of 2013. The EIA estimates a 1.3 million bbl/d average draw-down in global oil stocks for January and February.
There are numerous uncertainties as we move forward including the rate of technology advancements, geopolitical risk in many energy rich nations, growth in demand as the world continues its economic recovery, etc. Perhaps the only certainty is continued volatility and the need for oil trading risk management software to manage the volatility.
As Jim Rogers, Chairman, President, and CEO of Duke Energy has been known to express in speeches, “Ben Franklin said there are two certainties in life: death and taxes. To that, I would add the price volatility of natural gas.”
The future of energy is going to be quite interesting!
Triple Point officially opened its Latin American headquarters in Rio de Janeiro this week with a special reception hosting Vale, NORSUL, and other leading companies that rely on Triple Point’s Commodity Management solutions.
The new office enables Triple Point to service its rapidly growing customer base throughout the region. Latin America has always been an important market to Triple Point, with Petrobras becoming a customer back in 2000.
The Latin American economy is very commodity-driven because of rich natural resources including coffee, sugar, oil, and iron ore. The Brazilian economy in particular is the largest in the region, and the country is also one of the world’s largest commodity exporters.
In recent years, the commodity markets have become very volatile, with companies struggling to mitigate exposure to market swings. Because of these conditions, effective risk management is more important than ever, and Triple Point has seen interest in its commodity trading and risk management (CTRM) solutions increase significantly throughout Latin America.
The energy, mining, agriculture, and consumer products (CP) industries within Latin America represent big opportunities for Triple Point because Triple Point’s solutions provide extensive functionality that addresses the unique challenges of each industry. Learn more.
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.
There have been several recent announcements from Delta Airlines related to jet fuel and oil trading.
According to Reuters, Delta Air Lines Inc. reported a second quarter loss because it took $561 million in charges for fuel hedges. Part of the loss was taken for mark-to-market adjustments on open hedge contracts.
It appears that Delta has chosen not to apply FAS commodity hedge accounting treatment. Many of the news reports called these derivative purchases “bets” when in fact they are hedges that reduce risk.
If Delta used hedge accounting it would match the loss of open fuel derivative contracts against future jet fuel purchases and not show the loss in the current period. Hedge accounting is extremely complex, and an advanced, auditable software system is required to support the adoption of these procedures.
Separately but related to managing fuel cost and risk, Delta announced that it completed its acquisition of the Trainer Refinery in Pennsylvania through its Monroe Energy subsidiary. Delta will move jet fuel from the refinery to its hub airports in the Northeast. Additional refined products such as gasoline and diesel fuels will be traded for jet fuel in other parts of the country. Delta spent about $12 billion on jet fuel in 2011 and expects to serve 80% of its domestic jet fuel needs from the Trainer refinery and related deals.
Delta is the first airline to own refining capacity. It will be interesting to observe if other airlines follow suit and move to vertically integrate their energy supply chains.
Supplying a refinery with crude oil and trading products requires sophisticated energy trading and risk management (ETRM) software. With volatility seemingly increasing daily in the commodity and crude oil markets, it seems prudent for Delta to invest in a hedge accounting and oil trading and risk management platform.
Four years ago Triple Point acquired INSSINC, the leading commodity hedge accounting software solution, and integrated it into its energy trading and risk management (ETRM) software solution. At that time, Triple Point recognized the need for an integrated commodity management platform that seamlessly integrates all key risk areas.
The new volatility reality demands that all industries with exposure to commodities and energy review their current risk systems to ensure they are appropriately protected.
A combination of persistently low margins and high volatility can spell bad news for refining operations, causing intraday swings in oil prices exceeding their margins. According to an article recently published in Global Technology Forum, this situation is driving greater integration between refinery operations and trading activities within oil companies. It’s no longer good enough to be buying or selling to meet the needs of the refinery – supply traders and marketing personnel are being asked to use their market knowledge to make smarter trading decisions.
According to Viren Doshi, senior vice president, Booz & Co., a more trading-oriented approach has been most prevalent in northwest Europe, the Mediterranean, and the US Gulf Coast. Companies in these regions have recently had to be more flexible to survive low margins and leverage high price volatility in their markets. Independent refineries in particular have been bullish on this approach because of their less complex operations.
Software solutions that can minimize costs and maximize refinery margins by optimizing the entire supply and trading chain have been key to making trading integration easier for refiners. These solutions have the ability to process refinery plans and forecast demand and production information upon which the supply and marketing groups can take action. They also enable plan changes to be immediately visible to the trading group for improved efficiency and productivity. To learn more, read the full article.
According to McKinsey, Asia’s global middle class is likely to grow by three billion people over the next 20 years, and China and India are doubling per capita incomes by approximately 10 times the rate and 200 times the scale achieved by England’s Industrial Revolution in the 1800s.
This massive middle class expansion has fueled demand for commodities such as oil, coal, and wheat. More and more Commodity Management companies dealing in the Asia Pacific (APAC) region are realizing that in order to ensure price volatility doesn’t diminish profitability, they need advanced technology solutions such as Triple Point’s Commodity XL™ to optimize supply chains, improve decision-making, and minimize risk.
In 2011 Triple Point experienced record growth in APAC, with year-over-year revenue for the region increasing 75%. APAC customers include China National Offshore Oil Corporation (CNOOC) Limited, China’s largest producer of offshore crude oil and natural gas, as well as Bayin Resources, Dhanlaxmi Bank, Marubeni, Merit Chartering, and State Bank of India. Triple Point has also significantly expanded its staff in Asia Pacific, growing from 250 to over 400 employees, in order to ensure full support for the company’s growing customer base. In addition, Triple Point extended its Asia Pacific footprint with the acquisition of QMASTOR, the premier provider of mining software solutions, headquartered in Newcastle, Australia.