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Shell seeks FERC assistance to squash GreenHat Energy lawsuit in Texas court

June 03/2020

MOSCOW (MRC) -- Shell Energy North America has asked the Federal Energy Regulatory Commission to step in to help resolve a breach-of-contract claim GreenHat Energy brought against it in a Texas state court, said S&P Global.

Shell is looking to FERC to interpret PJM Interconnection's rules for bilateral transfers of financial transmission rights to debunk GreenHat's "extraordinary claim that entering data into PJM's platform for reporting FTR transfers created additional separate, binding contracts, which Shell Energy allegedly breached," according to the petition for declaratory order (EL20-49) recently filed with FERC.

The commission, in a June 1 notice, set a June 29 deadline for comments in the proceeding. Shell asserts the matter could put every market participant that has ever entered data into FTR Center, PJM's reporting mechanism for FTR transfers, on the hook for "unknown terms of alleged contracts [they] never agreed to."

Left unresolved, GreenHat's claim could lead to widespread FTR market uncertainty and prompt countless legal disputes against PJM members associated with the 137,000 entries made into the platform at issue over the past six years, Shell said.

Prior to GreenHat's massive June 21, 2018, default in PJM's FTR market, Shell entered into three bilateral agreements with GreenHat between August 2016 and February 2017. Those agreements resulted in a transfer to Shell and back to GreenHat of a portion of the FTR portfolio upon which GreenHat later defaulted.

Shell, in its May 29 petition to FERC, likened the agreements to consignment deals under which Shell would pay a discounted cash value to GreenHat for FTRs that sold at auction, and could return the uncleared FTRs to GreenHat or pay an agreed-upon price based on the auction results for uncleared FTRs it elected. 

As MRC wrote before, Pilipinas Shell Petroleum Corp said it will shut down its 110,000-barrel-per-day Tabangao refinery in the Philippines for one month from mid-May as the coronavirus pandemic has hammered oil demand.

We also remind that Shell Singapore restarted its naphtha cracker in Bukom Island this week following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 557,060 tonnes in the first three month of 2020, up by 7% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments rose because of the increased capacity utilisation at ZapSibNeftekhim. Demand for LDPE subsided. At the same time, PP shipments to the Russian market was 267,630 tonnes in January-March 2020, down 20% year on year. Homopolymer PP and PP block copolymers accounted for the main decrease in imports.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
Author:Anna Larionova
Tags:petroleum products, crude oil, PP, PE, petrochemistry, Shell.
Category:General News
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