Rock The Boat Don’t Rock The Boat – The Inland Crude Tank Barge Fleet

There are approximately 3,350 inland tank barges in the US that are all part of the Jones Act fleet. These barges move crude oil, refined products and petrochemicals along 12,000 miles of navigable inland waters – most along the Mississippi River system. Crude by barge traffic has grown 8 fold in the past three years and barges are over 90 percent utilized. Most of the increasing volume of crude moving from the Midwest to the Gulf Coast by barge is coming from Canada by pipeline and loading onto barges in Illinois. Today we review barge movements along the Mississippi River.

This blog is Episode Six in our series detailing the US Jones Act Fleet. We started the series by describing the Jones Act regulations that restrict marine transport between US inland and coastal ports to US Flag vessels (see The Jones Act Coastal Trade). Episode Two and Episode Three detailed the Jones Act self-propelled tanker fleet that operates in US coastal waters. In Episode Four we described the large Ocean going articulated tank barge (ATB) fleet that also operates in the coastwise trade. In Episode Five we considered the possibility of moving US crude from the Gulf Coast to the West Coast across the Panamanian Isthmus either via the Panama Canal or the Transpanama pipeline (TPP). This time we turn our attention to the smaller inland tank barge fleet.

We have previously described the inland river system that runs through the center of the US from the Great Lakes down to the Gulf Coast providing an important route for crude oil from North Dakota and Canada to get to market via tank barges (see Good Year for the Barges Part 2 and Float On). Barges are increasingly being used to move crude from ports like Illinois on the Upper Mississippi River and Wood River and St Louis on the Lower Mississippi to refineries in the Louisiana Gulf Coast region. Crude is transported from producing regions to barge terminals on the river either by railroad or pipeline. Unlike pipelines or railroads, barges can deliver to virtually any refinery that has waterborne access (that’s most of them) without having to develop new infrastructure such as rail unloading terminals or pipeline connections. With crude oil production surging in Canada and in North Dakota and with pipeline takeaway capacity constrained by slow development of routes through the Midwest to Gulf Coast refineries, barges provide a cost effective alternative to get barrels to market.

There are two sizes of tank barge that operate on inland waterways -10 MBbl and 30 MBbl. The smaller 10 MBbl barges are more commonly used in the upper Mississippi and Illinois River where the water draft (depth) is shallower. Barges are normally chartered-out as “unit tows” consisting of two to three barges and a towboat, under term contracts for 1-5 years or for shorter terms in the spot market. Current demand for barges is extremely tight. Inland “black oil” tank barges (used for crude oil) were 90-95 percent utilized in 2013 according to the largest operator, Kirby Corp that owns 861 tank barges or 26 percent of the approximately 3,350 strong fleet. Kirby’s nearest rival is American Commercial Lines LLC that owns 10 percent of capacity. Besides Kirby and ACL, there are another 39 tank barge operators in the business – including oil refiner Marathon Petroleum Company and Midstream heavyweight Enterprise Products Partners (source: Kirby Corp and Informa Economics).

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