Traders Bet Big on Shale
The big international oil trading firms bridge the gap between producers and consumers. To do so, they devote resources to intelligence, gathering systems, processing plants, and terminals. Operating on a global scale, they are not going to deploy assets in areas in which they do not foresee long term opportunities. According to a recent article in “Rigzone”, domestic investments by the big European trading houses has led international consultant, Jean-Francois Lambert, to conclude that “Shale, baring a major environmental issue, has become the new reality.”
Events since the price collapse of 2014 have convinced most industry observers that domestic shale operators have replaced OPEC as the swing producers in global oil markets. This lesson has not been lost on the major players such as Mercuria, Trafigura and Vitol.
Earlier this year Mercuria acquired a crude supply and marketing business from Enterprise Crude Oil LLC. This arrangement will provide Mercuria with access to more than 150 new counterparties including shale producers in North Dakota, Wyoming and Colorado. The company has also invested in a terminal facility in Mt. Airy, Louisiana, in order to expand its exposure to U. S. domestic shale operators.
Trafigura recently unveiled an agreement with Plains All American Pipeline LP to receive up to 100,000 barrels per day (bpd) of oil and condensate from the Permian Basin of West Texas and Southeast New Mexico. This, is in addition to already established businesses in the Basin, as well as the Eagle Ford shale of South Texas. The Plainsk agreement will secure additional supplies for Trafigura’s processing and export facilities in Corpus Christi.
Vitol, the world’s largest independent trader, was the first to export domestic crude once the oil export ban was lifted. The company anticipates domestic shale oil production to increase by as much as 700,000 bpd by the end of this year.
All of this has led Lambert to observe, “I would not be surprised to see more initiatives in this space.”
To read the article in its entirety, please go to http://www.rigzone.com/news/oil_gas/a/150923/Worlds_Top_Oil_Traders_Bet_American_Shale_Is_Here_to_Stay?utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-07-07&utm_content=&utm_campaign=industry_headlines_2 .
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