Forty percent of the world’s fuel oil - the residual oil left over after extracting lighter products from crude oil - is used as bunker oil to power Ocean going vessels. Much of that fuel has relatively high sulfur content. Given that refineries sell fuel oil for less than the cost of crude – the bunkers market has traditionally been a convenient dumping ground for unwanted high sulfur residual fuel oil. New international regulations that came into force in 2012 drastically reduce the permitted sulfur content in bunkers after 2015 in the world’s populated coastal regions. Today we describe the impact the new rules could have on refiners.
Daily Energy Blog
Thursday, 10/24/2013
Several large deep-water terminals located strategically on Caribbean islands play an important role in the international fuel oil trade. These terminals can berth larger vessels than most Gulf Coast ports – making them ideal staging points for transshipment of ocean bound cargoes coming and going from Europe, Asia or Latin America. With its recent acquisition of the Hess East Coast terminal assets, Buckeye looks set to become a dominant player in the Caribbean terminal and storage market. Today we conclude a two-part survey of Caribbean fuel terminals.
Sunday, 10/13/2013
Last Wednesday (October 9, 2013) Buckeye Partners announced an agreement to purchase Hess Oil’s East Coast terminal assets – including a crude and fuel oil terminal on the Island of St Lucia in the Caribbean. Buckeye already own a large oil storage terminal in the Bahamas, known as BORCO so with the new acquisition they will become the largest storage and terminal player in the Caribbean market. The fuel oil trade in the region is a combination of local bunkers supply, fuel oil for power plants and larger scale transshipments of fuel oil for international markets. Today we look at fuel oil terminal facilities in the Caribbean.
Tuesday, 10/08/2013
The BOSTCO Terminal started operations this week on the Houston Ship Channel. By early next year (2014) the terminal will have 6 MMBbl of storage capacity. This $500 Million investment by two midstream companies is designed to meet the expanding needs of fuel oil blenders at the Gulf Coast. Before the first phase could be completed, 900 MBbl of additional refined product storage planned for phase two, was snapped up by Morgan Stanley for distillate fuels. Today we describe the terminal facilities and ownership structure.
Thursday, 10/03/2013
The pig, or “Pipeline Integrity Gauge,” is a sophisticated device that is critical to the safety and integrity of pipelines. The oil and gas pipeline transportation industry can’t live without them. They help ensure the safe and efficient passage of crude oil, NGLs, petroleum products and natural gas through more than 2.3 million miles of pipeline in the U.S, according to PHMSA (Pipeline and Hazardous Materials Safety Administration). Over 3,000 pipeline operators in the U.S. manage this transport system. Their success is due in large part to pigs. Today we investigate the role of pigs in oil and gas pipeline transportation infrastructure.
Wednesday, 9/18/2013
The market for residual fuel oil is traditionally not attractive for refiners because prices are lower than for crude feedstocks. However, some of the world’s biggest oil traders profit from arbitrage between different fuel oil grades and locations. The Gulf Coast market is expected to expand as refiners add imported fuel oil to their feedstocks to balance lighter crudes coming their way from shale production. In October a brand new fuel oil terminal will open on the Houston Ship Channel to help serve the growing needs of fuel oil traders. Today, appropriately “International Talk-Like-a-Pirate-Day” we begin a new series covering the Gulf Coast fuel oil market.
Monday, 6/24/2013
A couple of months back in March 2013, the US Environmental Protection Agency (EPA) released proposed Tier 3 gasoline regulations that, if approved, will go into effect on January 1, 2017. The new rules include lower sulfur specifications for gasoline and tighter emissions controls for motor vehicles. Tier 3 also encourages acceptance of higher percentages of ethanol in gasoline. These regulations come at a time when US refinery gasoline blenders are jumping through hoops to handle a flood of new light shale crudes and increased demand for natural gasoline exports to Canada. Today we examines the proposals and their impact on gasoline and natural gas liquids markets.
Wednesday, 4/24/2013
There is plenty of crude oil in North Dakota but the State does not refine enough of it to meet rising demand for diesel caused by booming energy industry activity. The latest North Dakota Pipeline Authority data shows oil production in February 2013 up 40 percent since February 2012 to 778 Mb/d. Demand for diesel increased 35 percent between February 2010 and February 2013. North Dakota’s only refinery produces less than half the diesel the State consumes. To help remedy that disparity the first new refinery to be built in the Lower 48 since 1977 is under construction today and two more new refineries are planned. Today we look at the refinery economics.
Sunday, 3/31/2013
The start of April marks the traditional summer driving season. Domestic demand for gasoline is waning due to renewable fuels and higher fuel economy standards. At the same time the tight oil shale revolution is delivering greater volumes of lighter sweeter crudes to US refineries – including condensates. Those light crudes produce more gasoline when refined but can cause problems for refineries not configured to handle them. Today we describe a revolutionary process that could potentially bypass refinery distillation.
Thursday, 2/14/2013
Alkylate is a valuable blending component that accounts for about 12 percent of the US gasoline pool. Alkylate is manufactured by combining elements derived from NGLs and crude oil refining and is an important link between these two hydrocarbon markets. Alkylate has critical qualities required to meet complex modern gasoline quality specifications. Today we look at the qualities and manufacture of alkylate.
Wednesday, 6/27/2012
NYMEX Gasoline futures closed down two cents at $2.62/Gal today. The NYMEX gasoline contract is now down 23 percent since the middle of March. Refiners on the East Coast are heading for the exits. Will gasoline demand recover this Summer? In today’s blog “No Apparent Demand – US Gasoline Thirst Evaporates” we take a closer look at the fundamentals.
