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Come Sail Away - Exporting U.S. Crude Oil by Ship: Vessels, Chartering, Loading, Costs

U.S. exports of crude oil really took off in 2017, and the exporting pace has only accelerated this fall. In the 10 weeks since mid-September, crude exports have averaged nearly 1.6 million barrels/day, with the vast majority of that oil leaving by ship out of ports along the Gulf Coast. The lifting of the ban on most crude exports two years ago this month and the growth in exports since then have put a spotlight not only on coastal storage facilities, pipelines and marine docks, but also on the huge vessels used to transport crude to far-away destinations. Today, we discuss crude-export vessel configurations, tanker chartering practices, ship-loading challenges and transportation costs.

For more than 40 years — from just after the 1973-74 oil crisis until December 2015 — the U.S. government banned the export of most U.S.-sourced crude oil, the only exceptions being oil from Alaska, oil exported to Canada, some heavy oil from California and very limited trades with Mexico. Before the export ban was lifted two years ago, small volumes of crude were being exported — an average of about 350 Mb/d in 2014 and 465 Mb/d in 2015, mostly to Canada. When the ban became history, exports to countries other than Canada started to ramp up, pushing crude exports to an average of 600 Mb/d in 2016. In 2017, crude exports averaged about 950 Mb/d through mid-September and, as we said, nearly 1.6 MMb/d since then — hitting an all-time high of 2.13 MMb/d the week ended October 27, 2017, according to the Energy Information Administration (EIA). The incremental exports in 2017 have mostly moved to overseas markets on ships; exports to Canada (mostly by pipeline) have held relatively steady.

The growth in U.S crude export volumes has focused new attention on export-related infrastructure of all kinds, something we are reviewing in our ongoing blog series, Exportin’ From the Free World. Today’s blog zeroes in on the international tanker industry. First, let’s look at the tankers themselves. The primary tanker sizes for moving crude oil on the high seas are:

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