Pricing agency Platts wants to change what constitutes the Brent crude oil basket as North Sea production trends start to shift. Photo by Maryam Rahmanian/UPI | License Photo
Feb. 20 (UPI) -- Oil pricing agency Platts said it may shake up the grade of oil that makes up the global benchmark Brent as North Sea production fades.
The price for Brent crude oil serves as the global benchmark for crude oil prices. During the last decade, S&P Global Platts changed up the basket of what constitutes the benchmark by adding Forties, Oseberg and Ekofisk grades from the North Sea as production from the Brent field itself started to decline.
The pricing agency said now those other fields are starting to show their age and it's time to consider adding another blend to what constitutes Brent.
"Following an extensive period of consultation and engagement with market participants including refiners, traders, oil companies, exchanges and others, we have found strong support for the addition of a new crude and significant support for Troll specifically," the company stated.
The Brent field is located about 115 miles north of the Shetland Islands. Since production began in 1976, the complex has represented about 10 percent of total British production. Field maturation, however, has forced the idling of some of its production platforms
By the standards used by Platts, the Troll field, which is operated by Norwegian energy major Statoil, is the next-best thing to what's already in the Brent basket. Last year, the Troll field in the Norwegian waters of the North Sea reached its 1 billionth barrel of oil after 20 years in production.
Jonty Rushforth, the editorial director for the oil and shipping price group at Platts, said adding Troll oil to the Brent basket won't deplete the value of the global benchmark.
"Dated Brent has a long history of evolving along with the industry and today's announcement is no different: it is about preparing Dated Brent for the next 5-10 years," he said in a statement.
Brent in early Monday trading was running about $2.50 per barrel higher than West Texas Intermediate, the U.S. benchmark price for crude oil. According to U.S. government estimates, the difference -- or spread -- may narrow to about $1 per barrel on average for 2017.
Royal Dutch Shell is making preparations to dismantle part of its vast production infrastructure in the Brent field. Three of the four platforms have already been idled, though the company said production from the Brent field will continue for several years using the remaining Charlie platform.