TMX to shake up USWC, Pacific Aframax market

  • : Crude oil, Freight
  • 24/04/02

The looming start-up of the Trans Mountain Expansion (TMX) to Canada's Pacific coast is poised to reshuffle crude tanker flows in the region.

The expanded pipeline and marine terminal project, which will nearly triple the crude takeaway capacity from Alberta to Vancouver to 890,000 b/d, made a call for a combined 4.2mn bl of crude from shippers starting in April as it prepares to fill the new pipeline. Already, two cargoes have been heard sold to Asia-Pacific buyers in what has historically been a US west coast-dominated market.

Commercial operations on the pipeline are expected to begin in May.

With new access to Asia-Pacific markets, where oil demand is growing, Canadian crude will compete primarily with oil from Russia and the Middle East, but on the US west coast, where demand is stagnant at 1.4mn b/d, TMX crude will need to replace other supplies, shipbroker Poten said.

It will be difficult to dislodge medium sour Alaskan North Slope (ANS) crude, which makes up about a third of supplies on the US west coast, Poten said. Many US west coast refiners have been configured to run ANS for decades, and a well-integrated fleet of US flag tankers hauls ANS from Alaska to California and Washington, as required by the Jones Act.

Market participants expect Canadian heavy sours to compete most directly with similar grades from Ecuador, which supplied about 125,000 b/d of crude to California in 2023, according to data from Kpler. But Canadian crude holds a key advantage over Ecuadorian crude: Ecuadorian law requires that its exports be carried by Flopec, a state-owned shipping company, or companies under agreement with Flopec, which limits shipping competition and creates inflated freight rates.

Exceptions include cargoes when Flopec does not have tonnage in position or cargoes requiring ship sizes such as Suezmaxes, which Flopec does not operate.

The halt of crude production at Ecuador's Ishpingo, Tambococha and Tiputini (ITT) fields by 1 September also could reduce the country's output by 48,000 b/d in 2024, according to Petroecuador. To offset the loss of production, the company plans to drill 156 wells — up by 56pc compared with the 100 wells drilled in 2023 — in several blocks.

Asia-Pacific demand for Canadian crude

Meanwhile, Chinese refiners have already purchased two Aframax-size cargoes of TMX crude for June delivery. Asia-Pacific demand for Canadian crude is expected to increase, though how much demand materializes depends on the pricing of export supplies, the availability of suitable tonnage and the competitive response from other producers, Poten said.

In the first quarter of 2024, Vancouver-China Aframax rates ranged from $4.25mn to $5.5mn lumpsum, or $7.78/bl to $10.07/bl for Cold Lake crude, according to Argus data. But shipowners likely would reposition their tonnage to or near Vancouver from other regions if rates remain at those levels, a shipowner said.

An increase in vessel availability would create downward pressure on rates, but some shipowners already involved in the US west coast market might charge a premium to leave the region for Asia-Pacific, market participants said.

In anticipation of volatile freight rates, at least eight Aframaxes will be used on time-charters for two TMX shippers with the intention to use them in Vancouver, market participants said.


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24/05/22

Mexico crude exports up after Tula refinery outage

Mexico crude exports up after Tula refinery outage

Mexico City, 22 May (Argus) — Mexican crude exports have bounced back in May after a power outage hit state-owned Pemex's 315,000 b/d Tula refinery last week, likely freeing more crude for the export market. Crude exports rose to about 838,000 b/d so far in May, up by 18pc from full-month April but still 22pc lower compared with all of May 2023, according to trade analytics firm Kpler data. The month-over-month hike was likely supported by a power outage at the Tula refinery on 13 May, which affected up to 20 processing plants, according to market sources. It remains unclear if the refinery has resumed operations, but sources said the restart could take about two weeks. The Tula refinery, which supplies refined products to Mexico City's metropolitan area, processed 246,500 b/d of crude in March, of which 182,000 b/d, or 74pc, was medium or light sour crude, according to the latest Pemex data. Medium and light sour crude exports rose by 13pc to 336,000 b/d so far in May from the previous month, Kpler data show. Additionally, fires at the Salina Cruz and Minatitlan refineries in late April could have also added to the uptick of crude exports. Mexico this year trimmed crude exports to feed its domestic refineries as President Andres Manuel Lopez Obrador seeks to cut fuel imports in his final year in office, in line with his campaign promise to make Mexico more energy independent. Pemex's six domestic refineries processed over 1mn b/d in March for the first time in almost eight years, driven by billion-dollar investments in maintenance since 2019 and the cut in crude exports. The start-up of the new 340,000 b/d Olmeca refinery could further reduce crude exports, but the refinery still faces multiple delays . By Antonio Gozain Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Alabama Demopolis lock reopens early


24/05/22
24/05/22

Alabama Demopolis lock reopens early

Houston, 22 May (Argus) — The failed Demopolis Lock, at the intersection of the Tombigbee Waterway and Black Warrior rivers in Alabama, has reopened two weeks earlier than projected. The lock reopened on 16 May, ahead of the scheduled 30 May opening . Vessels carrying commodities such as asphalt, coal, petcoke, metals and fertilizers have been able to pass through the lock without a long queue since the reopening, according to the US Army Corps of Engineers. The lock had been closed since 16 January when the concrete sill underneath the lock doors failed. The lock was largely rebuilt over the ensuing four months Traffic that would typically pass through the lock was rerouted during the closure. Multiple steel mills in Alabama and Mississippi move some of their feedstock and finished product through the Demopolis lock. Those mills have 8.16mn short tons (st)/yr of flat, long, semifinished and pipe steel production capacity. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK general election set for 4 July


24/05/22
24/05/22

UK general election set for 4 July

London, 22 May (Argus) — A general election will take place in the UK on 4 July, prime minister Rishi Sunak said today. The announcement coincides with official data showing that UK inflation has fallen to its lowest level in nearly three years. Labour, the country's main opposition party led by Keir Starmer, has held a substantial lead in polls in recent months and performed well in local elections earlier this month. It won nearly 200 seats on local councils, as well as several regional mayoral contests, while the ruling Conservative Party lost almost 500 council seats. The Conservatives have been in power since 2010 and have fielded five prime ministers during that time. The two main parties are likely to release more detailed manifestos once the election campaign begins, but their current respective energy policies have many similarities. Both back a windfall tax on oil and gas producers and support nuclear power. They both also support offshore wind and solar power, although Labour has incrementally more ambitious targets for those renewables and has plans for more onshore wind. Labour also wants a zero-carbon power grid by 2030 , while the Conservatives are aiming for that in 2035. The Conservatives have rolled back some climate policy since Sunak became prime minister, while Labour in February backed down on its pledge to spend £28bn/yr ($35.6bn/yr) on the country's energy transition, if it wins the election. For a general election to take place in the UK, the prime minister must request permission from the British monarch — King Charles III — who then dissolves parliament. A general election must take place at least once every five years in the UK, although a prime minister can call one at any point. The UK's last general election was held on 12 December 2019 and Boris Johnson was elected prime minister. There have since then been two prime ministers — Liz Truss in September-October 2022 — and Sunak. Truss was selected by Conservative Party members and Sunak became prime minister in October 2022 after the only other candidate withdrew from the leadership contest. The Conservatives hold 344 seats out of 650 in the House of Commons, the UK's lower house of parliament. But 105 members of parliament have said that they will not run at the next election, 66 of whom are Conservatives. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US crude stocks rise by 1.8mn bl last week: Update


24/05/22
24/05/22

US crude stocks rise by 1.8mn bl last week: Update

Adds report details starting in seventh paragraph. Calgary, 22 May (Argus) — US crude inventories rose by 1.8mn bl last week on a sizable build in the Gulf coast region, the Energy Information Administration (EIA) reported today. Crude stocks across the US came in at 458.8mn bl in the week ended 17 May, up from 457mn bl a week earlier. Inventories were up by by 3.7mn bl compared to a year earlier. Stocks in the US Gulf coast rose on the week by 3.6mn bl to 261.5mn bl, approaching a 12-month high set in the week ended 26 April when stocks were at 261.6mn bl. The week-over-week build in the US Gulf coast ranks as the fifth largest through the first 20 weeks of the year. Inventories at the Cushing storage hub in Oklahoma rose by 1.3mn bl to 36.3mn bl, but that was still 910,000 bl lower than the same week in 2023. Crude inventories at the US Strategic Petroleum Reserve (SPR) increased by 993,000 bl to 368.8mn bl, the largest weekly build so far this year. SPR stocks are not included in the overall EIA commercial crude inventory figures. US crude exports rose last week by 595,000 b/d to 4.7mn b/d, while imports fell by 81,000 b/d to 6.7mn b/d. Net imports fell by 676,000 b/d to 1.9mn b/d as a result. Domestic crude output was steady at 13.1mn b/d. US crude refiners processed about 16.9mn b/d last week, up by 241,000 b/d from the week prior and the highest since the week ended 12 January. Runs were 354,000 b/d higher than the same week in 2023. Refinery utilization rates on average rose to 91.7pc nationwide, up from 90.4pc in the prior week and 91.7pc in the same week of 2023. Refiners in the midcontinent and Gulf coast regions drove the weekly gains, each climbing to multi-month highs. Utilization rates in the midcontinent rose to 94.8pc from 90.8pc in the week prior while rates in the Gulf coast climbed to 93.7pc from 92.7pc. By Brett Holmes US weekly crude stocks/movements Stocks mn bl 17-May 10-May ±% Year ago ±% Crude oil (excluding SPR) 458.8 457.0 0.4% 455.2 0.8% - Cushing crude 36.3 35.0 3.8% 37.2 -2.4% Imports/exports '000 b/d Crude imports 6,663 6,744 -1.2% 5,850 13.9% Crude exports 4,730 4,135 14.4% 4,549 4.0% Refinery usage Refinery inputs '000 b/d 16,894 16,653 1.4% 16,540 2.1% Refinery utilisation % 91.7 90.4 1.4% 91.7 0.0% Production mn b/d 13.1 13.1 0.0% 12.3 6.5% — US Energy Information Administration Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s Mol adds to LNG fleet for Jera


24/05/22
24/05/22

Japan’s Mol adds to LNG fleet for Jera

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