CME Group to develop new Gulf Coast crude oil futures contract at Enterprise Terminal

CME Group to develop new Gulf Coast crude oil futures contract at Enterprise Terminal


CME Group, the world's leading and most diverse derivatives marketplace, today announced it will work with oil market participants to discuss developing a new Gulf Coast crude oil futures contract at the ECHO Terminal, a storage facility being developed by Enterprise Products Partners L.P., to be listed on the NYMEX exchange. Connected to multiple facilities along the Houston Ship Channel, the ECHO Terminal is expected to begin service during the second quarter of 2012. The ECHO Terminal will be the destination of Enterprise's Eagle Ford Crude pipeline, as well as the Seaway pipeline following the reversal project announced November 16, 2011 by Enbridge Inc. and Enterprise. Once the process of changing the flow direction has been completed, Seaway will transport crude from Cushing, Oklahoma to the Houston refining market. The Seaway pipeline will accommodate growing domestic crude oil production supplies from the Cushing hub and Canada.

"The recent announcement to reverse the Seaway pipeline represents a major development for the North American crude oil market, and will be an important logistical solution for the vital Cushing marketplace," said Bryan Durkin, chief operating officer and managing director, products & services at CME Group. "We believe this new project will make the NYMEX Light Sweet Crude Oil (WTI) benchmark more accessible to global markets, bringing 150,000 barrels a day to the Gulf from Cushing by the second quarter of 2012 and approximately 400,000 barrels a day by 2013. This is a significant milestone, and we look forward to working with our oil industry customers to explore the development of a new physically-delivered crude oil futures contract at Enterprise's ECHO terminal."

Michael A. Creel, president and chief executive officer of Enterprise's general partner, stated, "As part of our integrated network of midstream assets, the ECHO Terminal provides an important delivery point for domestic crude oil production from conventional areas, as well as the growing shale plays. We look forward to working with CME Group as it develops a new Gulf Coast crude oil contract that helps the global energy market manage risk more effectively."

CME Group will consider developing a new contract with similar quality specifications as the current NYMEX WTI contract traded at Cushing to be listed on the NYMEX exchange. Other crude oil contracts could be added for physical delivery at ECHO as market demand warrants. Through the ECHO Terminal, shippers will have access to the major refineries in Texas City, Pasadena/Deer Park, Baytown and others along the Houston Ship Channel. Altogether, these facilities represent more than 2 million barrels per day of refining capacity. Engineering work is now under way for an extension of Seaway from the ECHO Terminal to Port Arthur, Texas, which features heavy crude oil refining capabilities.