Friday, May 30, 2014

Shale gas boom threatens US lightering operations

Increasing US shale gas production infrastructure development will destroy imports and lightering operations in the US Gulf and East Coast areas, said a leading analyst.
The completion of new US pipeline and rail projects will enable higher volumes of oil shale crude to be transported to the East and Gulf Coast areas and, with the country’s ever-increasing oil production, will further reduce the need for imports. As a result, this  will also help to eliminate lightering operations in the near future.
According to Carmine Rositano, GlobalData’s managing analyst covering downstream oil & gas, crude oil imports into the East Coast from North and West Africa, which provide primarily light sweet crude oil and the Middle East, which is mostly medium and heavy sour crudes, amounted to about 450,000 barrels per day in 2013. This represents an estimated decline of 40% from 2010 levels of 750,000 barrels per day.
These shipments, which were lifted on Suezmaxes and VLCCs, were offloaded into smaller vessels that delivered the imported oil to their respective refineries.
Rositano explained: “Over the past few years, the increase in light sweet Bakken crude oil transported to East Coast refineries has reduced crude oil imports and lightering volumes. New rail tracks, crude storage tanks and machinery that can unload train tank cars quickly are now being built in the Philadelphia area to supply nearby refineries.
“The recent start-up of the 140,000 barrels per day rail-to-barge terminal at Yorktown, Virginia, along with improvements at New Jersey’s Perth Amboy terminal, which are aimed at bringing more Bakken crude oil to the East Coast, will eliminate refiners’ needs to import light sweet crude oil from North and West Africa into this area.”
Crude oil imports into the Gulf Coast area have also declined significantly, as production from the Eagle Ford and Bakken fields has risen. These production levels, combined with new pipeline and rail infrastructure investments, will bring additional volumes of oil into Texas and Louisiana and further reduce imports and lightering activities, warned Rositano.
In addition, the Gulf of Mexico will see its lightering operations continually dwindle while crude imports from Africa are wiped out, as cargoes transported from this region are currently carried on Suezmaxes and VLCCs, which must be offloaded into Aframaxes before being shipped to Texas refineries.
“Based on new projects moving domestic crudes into the Gulf Coast areas, the elimination of African crude imports and associated lightering operations in the Gulf of Mexico could occur as early as 2016,” she concluded.   

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