We Can Work It Out - Moving Bakken and Other U.S. Crude on VLCCs from the Gulf to Asia

For the first time ever, a Very Large Crude Carrier (VLCC) carrying Bakken crude has sailed from the Gulf of Mexico to Asia, and more may follow. With the startup of the Dakota Access Pipeline set for June 1, Bakken producers are only days away from gaining easier, cheaper pipeline access to the Gulf Coast, and are looking for new markets. Asian refineries are willing to pay a premium for Bakken-type crudes, and want other types of U.S. crude as well. And every 18 hours or so, a VLCC arrives at the Louisiana Offshore Oil Port—the only U.S. port capable of handling the mammoth vessels—offloads crude and leaves LOOP empty because the port is currently an import-only facility. Today we consider the potential for transporting more light, sweet crude to Asian refineries on VLCCs, either via ship-to-ship transfers or by reworking LOOP to enable exports.

This past Sunday (May 14, 2017), the Greek-flagged Maran Canopus, an 1,100-foot-long VLCC capable of carrying more than 2 million barrels (MMbbl) of crude, completed a weeks-long journey from off the coast of Louisiana to Malaysia. According to our friends at ClipperData, before the Maran Canopus left the Gulf of Mexico, she received ~600 Mbbl of Bakken crude as well as ~1 MMbbl of Mars Sour crude (and other crude as well). A smaller Aframax-class vessel, the ADS Oslo, loaded the Bakken oil at Enterprise Products Partners’ Beaumont, TX, marine terminal and transferred her cargo to the VLCC in deeper waters. The Mars Sour crude (which was produced from deepwater wells in the Gulf) was loaded onto two ships—the very same ADS Oslo at Royal Dutch Shell’s Sugarland marine terminal in St. James, LA, and another Aframax-class ship, the Eagle Texas, at NuStar Energy’s nearby St. James marine terminal —which transferred their cargoes to the Maran Canopus too. (Mercuria Energy Trading is listed as the shipper on the export bill.) We understand from ClipperData that this is only the second time that Bakken crude has been exported out of the Gulf of Mexico ­­—the first was a much smaller volume (~174 Mbbl) that was shipped out of the Gulf to Rotterdam (in the Netherlands) in April 2016.

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