SUGAR LAND, TX--(Marketwired - Mar 18, 2014) - Written by John Egan for Industrial Info Resources (Sugar Land, Texas) -- The shale revolution has collapsed boundaries between once-distinct energy markets like crude oil, natural gas, natural gas liquids, petroleum refining and power. Faced with increased complexity, energy traders and asset owners are turning to new software platforms to manage risk and identify profitable opportunities.
"The energy market once consisted of very disparate sectors and interests," said Paul Copello, president of IIR Energy. "Back then, there were separate submarkets for power, crude oil, oil products, and natural gas. It was analogous to ice cream stores in the good old days, where there were only three flavors sold -- vanilla, chocolate and strawberry. But the shale revolution is creating a lot of new flavors in energy markets -- the same way some ice cream shops today are mixing gummi bears, chocolate-chip cookie dough and strawberry gelato to produce a unique product.
"For example, oil traders now need to know about NGL [natural gas liquids] markets," Copello said. "Power burn and power plant retirements affect natural gas traders. The construction of new industrial plants affects basis trades. More supply and demand fundamentals affect more commodities than ever before, and once-distinct commodities have become highly intertwined."
High prices for crude oil have stimulated new drilling and increased production across North America. Copello noted some areas, like the Eagle Ford and the Bakken shales, produce a mixture of oil, natural gas and natural gas liquids. But too much of a good thing isn't always wonderful: Refiners can't process all the light sweet crude that is coming out of the Eagle Ford and Bakken, so logistical options are needed to transport that crude to refineries where it can be processed and even exported.
Surging NGL production has created a domestic glut of ethane, which has depressed prices, the IIR Energy president continued: "That's great news for petrochemical companies, but bad news for producers. NGL pipelines and export terminals are being built to monetize the flood of NGLs and reduce the amount of flaring and ethane rejection. NGL trading is no longer limited to in-flows and out-flows at the Mont Belvieu hub. Today, NGL trading is an international business involving construction of new pipelines, processing facilities and export terminals as well as new petrochemical plants in the U.S."
Traders and asset owners using IIR Energy's NatGas Live platform can craft optimal trading and operational strategies amid highly volatile, and increasingly linked, markets. What makes NatGas Live uniquely valued in the market is its use of up-to-the-minute plant outage information from Industrial Info Resources (IIR), as well as IIR's disciplined research methodology into industrial projects being constructed, expanded or retired.
For example, construction of new gas-fired power plants in California has ground to a halt in 2014, in part because the state's electric utilities achieved their 2013 Renewable Portfolio Standard (RPS) milestone requirements. Electric utilities were required to have 20% of their electricity coming from renewable sources by the end of 2013. All of them met that target. Thus, there is scant demand for new gas-fired generation in that state to back up the intermittent power from renewables.
The California energy market shows the interconnectedness of renewable energy, natural gas supply, gas pipelines and energy trading. Across the country, in the PJM market, extreme cold and unplanned generator outages rocked gas and power trading in January. Several generators tripped offline that month because they had been run so hard for so long. Unplanned outages added another level of complexity to power trading and asset ownership. Profitable opportunities were created--for market participants with the right tools.
"Our use of the PEC -- Planning, Engineering and Construction -- research methodology allows users to find out exactly what stage of development or retirement a particular plant or unit is in," said John Best, the vice president of research at IIR Energy. "We don't get our information from scrapping news items off the Internet. We have live researchers talking to asset owners every day, verifying critical information about projects and plants. This gives users a more detailed look at future energy projects, including their scheduled in-service date, so traders and asset owners can adjust their trading and operational strategies."
"The PEC methodology allows us to see the connection between the decline in windpower construction in California and the decline in natural gas-fired generation there," Best said. "It also allows us to track the vintage of thousands of generator turbines that are getting a little long in the tooth. Users can get an exact picture of the age and operating specifications using our databases."
IIR Energy operates in high-tech and high-touch mode. Users with questions can call our hotline and speak with researchers. IIR Energy researchers answer at least 1,000 hotline inquiries each year. "Our researchers are there to take your call when you need the information," Best said. The inquiry hotline is a critical value-add for our clients -- it spells the difference between data in a database and dynamic market intelligence."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the www.industrialinfo.com "Contact Us" page.