Helping customers manage their physical crude oil storage price risk with price transparency and access to short-term storage.
The Louisiana Offshore Oil Port LLC (LOOP) is a deepwater port in the Gulf of Mexico off the coast of Louisiana near the town of Port Fourchon. LOOP provides tanker offloading and storage services for crude oil transported on some of the largest tankers in the world. LOOP’s onshore facilities, Fourchon Booster Station and Clovelly Dome Storage Terminal, are located onshore in Fourchon and 25 miles inland near Galliano, Louisiana.
The Clovelly Dome Storage Terminal is used to store crude oil in underground salt domes before it is shipped to various refineries. The terminal consists of eight caverns with a total capacity of 50 million barrels. LOOP also operates a large, modern tank facility at Clovelly, Louisiana. Each tank holds up to 600,000 barrels of crude oil. Fifteen tanks are currently in service. Current construction will expand the tank facility to approximately 10 million barrels of crude oil storage.
In collaboration with the CME Group and LOOP, Matrix launched the world’s first crude oil storage futures contract in March 2015. By enhancing price transparency of monthly storage capacity along the U.S. Gulf Coast, LOOP Crude Oil Storage Futures help customers manage their physical crude storage price risk, while enhancing price transparency of, and access to, short-term (monthly) storage capacity along the U.S. Gulf Coast.
The contract is an important tool to help manage delivery of crude oil in the U.S. Gulf Coast market at LOOP’s Clovelly Hub. The contract also enhances liquidity of the existing LOOP Gulf Coast Sour Crude Oil Futures (CME: MB) contract, which is physically deliverable at LOOP. The re-launch of a physically deliverable Gulf Coast sour crude contract is a crucial tool for market participants including refiners and U.S. and international producers who cannot fully manage their price risk by relying exclusively on the ubiquitous West Texas Intermediate crude contract.
Matrix helps market participants access increased optionality and improved price discovery through an on-line auction, occurring at 11 a.m. CT on the first Tuesday of every month.
Success at a glance
World’s first futures contract on crude oil storage capacity
Transformed how energy customers transact for storage
Materially reduced credit exposure for participants of the auction
Provided a transparent method by which customers can transact, establishing a market reference price
Equally important to the creation of the storage futures concept is the reintroduction of a physically deliverable Gulf Coast medium sour crude (LOOP Sour) contract.