Latest storage news
US crude oil production is expected to surpass the all-time high set in 1970 as the Permian region continues to increase output.
According to the EIA, crude production will average 9.4 million barrels per day (b/d) in the second half of 2017, 340,000 b/d more than in the first half of 2017. Production in 2018 is expected to average 9.9 million b/d, surpassing the previous high of 9.6 million b/d set in 1970.
The EIA's Short-term energy outlook (STEO) projects that most of the production growth in the second half of 2017 will be in the Permian region. It has become one of the more active drilling regions in the US. Production continues to increase, in part, as a result of WTI crude oil average monthly prices that have remained higher than $45 per barrels since the second half of 2016.
The STEO forecast is based on recent drilling and production trends and on anticipated future changes, driven largely by the WTI crude oil price.
Pin Oak Corpus Christi has completed the acquisition of Gravity Midstream Corpus Christi.
The owners of Pin Oak Terminals, Dauphine Midstream and Mercuria Energy Group provided equity financing for the transaction.
Dauphine and Mercuria also recently commissioned a new storage terminal – Pin Oak Terminals – in Louisiana, which has approximately four million barrels of contracted capacity.
Pin Oak Corpus Christi has 737,500 barrels of storage, pipeline connections into nearby refineries, a crude processing unit, a polymer modified asphalt plant, rail loading and unloading facilities, a truck rack and access to Aframax and barge docks.
There are also long-term contracts in place to significantly expand the terminal's operations.
Craig Peus, CEO of Gravity Midstream, says: 'The team at Corpus Christi is excited to be joining the Pin oak family and partnering with investors who are dedicated to taking the terminal to the next level by expanding the terminal's operations and building a strategic hub in Corpus Christi.'
Harris Ziskroit, chief investment officer at Dauphine, adds: 'The site is optimally located and has tremendous potential to become one of the only multi-modal terminal facilities in Corpus Christi, offering a wide array of service offerings to move, store and process petroleum products.'
A tender for the construction of part of a pipeline for the Jask Oil Terminal is due to be held shortly.
An Iranian news agency reports that the MD of the National Iranian Oil Company says that tender is for part of a pipeline to transfer crude oil to the facility located in the southern Hormozgan Province.
Ali Kardor was quoted as saying: 'A project to lay a section of the pipeline has already been tendered and the remaining part will be put out to tender in the next few days.'
The project comprises laying 1,000 kilometres of oil pipeline from Genaveh in Bushehr Province to the port of Jask to transform Jask into a major oil terminal, which is aimed at easing and speeding up Iran's oil loading and shipment operations.
The terminal is part of a wider development plan to build two refineries, a petrochemical complex and oil storage units.
Stolthaven Terminals continues to deliver steady financials as the company implements a plan to improve its sustained long-term performance.
Its third quarter operating profit was $16 million, essentially unchanged from $16.1 million in the second quarter. Its utilisation rates fell from 87.5% to 85.6%, reflecting additional new capacity and a decrease in total contracted volume.
The company says the negative impact of the decrease in leased capacity and volume was more than offset, mainly by higher excess throughput revenue, along with increased utility revenue in Houston.
In its third quarter financial report, the company says that while Hurricane Harvey caused no physical damage to its property, due to the closure of the Houston Ship Channel, operational shutdowns and port delays, the third and fourth quarter results have been, and will be impacted.
Niels G. Stolt-Nielsen, CEO of Stolt-Nielsen, says: 'Results at Stolthaven Terminals were once again largely in line with those of the previous quarter, as we continue to implement actions aimed at improving that division's sustained long-term performance.
'Hurricane Harvey caused no material physical damage to the company's assets in Houston. In fact, we have taken steps in recent years to improve the hurricane preparedness of our terminal facility and our tank container depot along the Houston Ship Channel – and those actions proved effective.
'That said, our tanker, terminal and tank container operations all experienced some losses and additional costs because of the storm, through the financial impact, which is not expected to be material, will mostly be felt in the fourth quarter.
Looking ahead, Stolt-Nielsen adds: 'On balance, our overall outlook remains unchanged. For Stolthaven Terminals, we continue to expect a modest but steady improvement in results, driven by actions to enhance operational performance across our network of terminals.'
Orpic Logistics Company (OLC) has commissioned and started operations at its oil storage facility in Al Jefnain, near Muscat.
The facility comprises a new oil product storage and distribution centre with a capacity of over 170,000 m3 as well as 16 loading racks. It was commissioned by the CLH subsidiary of OLC, which was jointly created by CLH and Orpic.
The new facility is equipped with the latest technology, which enables the loading process to be completely automated from the moment the road tankers enter the facility until the relevant documentation is printed.
Road tankers from the major oil operators in the country have successfully completed the first fuel loading operations.
The facility receives fuel from the Sohar refinery through a new pipeline, the first one of its type built in the country. This makes it possible to reduce fuel transport by road and to increase the safety and efficiency of fuel distribution in Oman.
It is expected that in the coming months, the new plant will also be connected via pipeline with the refinery in Mina Al Fahal and Muscat international airport.
Once fully operational, the new logistics system will supply more than 50% of the country's fuel. It will provide a higher supply capacity of aviation fuel, as well as greater efficiency and sustainability, thanks to the use of the pipeline.
José Luis López de Silanes, chairman of the CLH group, says: 'We are proud to launch the first start of such an important operation for the country, which will make it possible to transform its logistics system for oil products into a safer, more efficient and sustainable model.'
USD Partners has started operations at its crude oil terminal in Stroud, Oklahoma.
The planned work required to allow the terminal to handle heavier grades of crude oil was completed one time and under the initial planned budget.
The Stroud terminal provides a destination point for rail-to-pipeline shipments of heavy crude oil from USD's Hardisty terminal in Western Canada and provides connectivity to one of the largest crude oil storage hubs in North America – Cushing.
Approximately 50% of the Stroud terminal's current capacity is available and actively being marketed to meet the takeaway needs of current and future customers.
Alexandra Batycky, associate director of USD Group, says: 'Our ability to deliver on time and under budget is a testament to the dedication, collaboration, and execution by the various stakeholders involved including our customer, the railroads and USD.'
Colonial Terminal Logistics is offers marine export capabilities to Colonial Pipeline shippers through Enterprise Products Partners' Beaumont terminal.
This will allow Colonial Pipeline shippers to move product from 13 Gulf Coast refineries to the Beaumont Terminal for loading onto vessels for transportation to the Florida retail marker, as well as for export to foreign destinations.
Colonial can provide customers firm dock capacity rights and will also have access to as much as two million barrels of new storage at the Beaumont facility.
Colonial says its long term vision is to move products for marine export from multiple terminals in the greater Beaumont/Port Arthur/Orange area. Its marine logistics services, which are cost advantaged to refined product services offered on the Houston Ship Channel, include storage, blending and dock usage solutions.
Bill Ordemann, executive vice president, commercial, for Enterprise's general partner, says: 'We are pleased to execute this agreement with Colonial Terminal Logistics, which expands the effective reach and increases volume for our Beaumont refined products marine terminal and storage complex.
'Our Beaumont facility is part of one of the most extensive marine terminal networks along the Gulf Coast and is uniquely positioned to provide flow assurance and market choices for refined products.'
Targa Resources has entered into a joint venture with Blackstone Energy Partners in the Grand Prix Pipeline and has signed a letter of intent to own a stake in the Gulf Coast Express Pipeline.
The company has executed agreements to sell a 25% JV interest in the Grand Prix natural gas liquids pipeline to funds managed by Blackstone Energy Partners.
Once complete, the pipeline will be a new 300,000 barrel per day common carrier NGL pipeline from the Permian Basin to Mont Belvieu, Texas.
Targa and EagleClaw Midstream Ventures have also executed a long-term raw product purchase agreement for transportation and fractionation services for the pipeline.
It is expected that the Grand Prix pipeline is due to be operational in the second quarter of 2019.
Additionally, Targa also announced it has executed a letter of intent, along with Kinder Morgan Texas Pipeline regarding the Gulf Coast Express Pipeline project. The project will provide an outlet for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast.
The participation of the three parties involved with the project is subject to negotiation and executive of definitive agreements.
As part of the agreements, Targa would own a 25% equity interest in it and would commit significant volumes to the proposed project.
The expected in-service date of the pipeline continues to be scheduled for the second half of 2019.
Glencore plans to acquire shares in Chevron South Africa and Chevron Botswana to expand its oil business.
The company has entered an agreement with Off The Shelf Investments Fifty Six Proprietary (OTS) to acquire a 75% OTS has in Chevron SA and certain related interests and the entire issued share capital of Chevron Botswana.
The assets comprise the interests of the Chevron group in its manufacturing, retail and industrial supply business in South Africa and Botswana.
The assets include a refinery in Cape Town with a crude processing capacity of 100 kbd, a finished lubricants blend plant and base oil terminal in Durban, a network of coastal shipping, depots and pipelines with significant crude delivery and storage infrastructure at Saldanha Bay and Cape Town Harbour and the South African retail network.
Glencore says it believes the assets provide an attractive downstream opportunity for its oil business.
The transaction is expected to close in mid-2018.
Fujairah's commercial stocks of refined oil products fell to a new low of 16.014 million barrels in the week to Monday, October 9, down 3% due to continued draws on heavy distillates and residues, according to S&P Global Platts Analytics.
Stocks of heavy distillates and residues fell 8.4% week on week to 8.5 million barrels, the lowest level since February, and second lowest total since stock records started being published in January, data released Wednesday by the Fujairah Energy Data Committee (FEDCom) showed.
Heavy distillates and residues account for more than half the total oil products stored in Fujairah. These stocks have now fallen 27%, or 3.17 million barrels, over the past two weeks, with outflows of fuel oil cargoes within the Persian Gulf region, as well regular shipments to Pakistan. That has been in addition to strong demand from Singapore, which has pulled Middle Eastern barrels towards Asia.
Last week saw the spread between benchmark Singapore 380 CST and Arab Gulf 180 CST rose to the highest level since March.
Platts Analytics estimated fuel oil exports from Iran, the region's largest net exporter, at 1.5 million mt in September, with shipments expected to decline to around 1.1 million mt in October as the country's electricity demand rises.
In addition, Iran's domestic power sector has been using more fuel oil due to gas shortages related to ongoing maintenance at the South Pars fields. Light distillate stocks fell 4.3% to 4.554 million barrels, well below the 4.9 million barrel average since the beginning of the year. That was despite balanced fundamentals in the petrol market in Europe, Asia and the Middle East, after prices saw a post-Harvey correction.
At the same time, the east of Suez market had pockets of strong petrol demand, in particular from Iran, Pakistan, Sri Lanka, Vietnam and Indonesia. First-month/second-month Arab Gulf gasoline 95 swaps fell to a three-month low last week, but have since steadied to be at 65 cents/b Tuesday.
MIDDLE DISTILLATES STOCKS RISE
Middle distillate stocks stood out this week, rising 19.5% to 2.957 million barrels, but remained below the 3 million b/d for the fourth week in a row due to the open arbitrage which has drawn gasoil from the Middle East and India to Europe.
The east-west gasoil exchange of futures for swaps was at a near four-week high of minus $20.55/mt Tuesday. While that indicated that arbitrage economics were still workable, rising freight rates and higher US distillate production meant the economics were getting tighter. US Gulf Coast refineries have now largely recovered from recent disruptions, with latest weekly data showing total US distillate production at 4.93 million b/d - up 216,000 b/d year on year.
Contanda Terminals has acquired 339 acres of land within the Port of Houston to further develop its storage terminal capability.
The multi-year commercial agreement covers a piece of prime, deep-water access property located on the Houston Ship Channel.
This acquisition enables Contanda to continue to develop its key strategic business objective of doubling its terminal storage capability over the next five years, and to expand into the bulk petrochemical and hydrocarbon markets.
The company says it will further strengthen its presence along the US Gulf Coast where project investments have surged since 2014. It operates three other bulk terminals along the Gulf Coast.
G.R. (Jerry) Cardillo, president and CEO of Contanda, says: 'This agreement with the Port of Houston Authority solidifies our long-term commitment to grow with the Port of Houston and the Houston Ship Channel.
'With this project, Contanda has the opportunity to make significant strides in achieving our corporate goals while firmly establishing our position as a leading storage provider in the growing petrochemical and hydrocarbon markets. We firmly believe in the Port of Houston, its capabilities and the opportunities it presents to our customers and shareholders.'
Contanda's state-of-the-art automated terminal facility will be built in phases to provide customers access to onsite processing, multiple ship and barge docks, and convenient tank truck and railcar accessibility.
The facility is centrally located for numerous pipeline connections, providing support storage services for a variety of commodities including petrochemical, clean petroleum products, various blend stocks, ethanol, crude oil, and refinery intermediates and other bulk commodities.
In addition to its three Houston terminals, Contanda operates 13 other bulk terminals across the US.
Fujairah's commercial stocks of refined oil products totaled 16.512 million barrels in the week to Monday, October 2 down 14.4% week on week, the lowest level since stock records for the UAE port began being published in January.
Light distillate stocks, mainly petrol and naphtha, fell to a fresh eight-month low at 4.752 million barrels, down 5% week on week from 5.002 million barrels, data released Wednesday by the Fujairah Energy Data Committee (FEDCom) showed. Middle East demand has been firm, supported by recent tenders for October petrol from Egypt and Kuwait.
Middle distillates also fell by 5.6% to 2.475 million barrels, the second lowest level on record, and 1.225 million barrels below the average for the year so far. This is again due largely to the ongoing impact of Hurricane Harvey on US Gulf Coast refineries.
The latest data from the US Energy Information Administration showed distillate production at 4.64 million b/d, still some 400,000 b/d below pre-Harvey levels. The arbitrage opportunity to move gasoil from the Middle East to Europe remains open, but stronger freight rates have begun to erode these economics. The east-west Gasoil EFS was minus $25.93/mt Tuesday.
BACKWARDATION ENCOURAGING HEAVY DISTILLATES DRAW
Fujairah's stocks of heavy distillates and residues, which constitute more than half the total oil products inventory at the port, logged the largest fall, dropping 20.5% to 9.285 million barrels, the lowest total since May 22. This was attributed to increased outflows of fuel oil during the week, including sizable volumes headed to Rotterdam and Port Qasim in Pakistan.
Pakistan State Oil tendered for a total of 520,000 mt of HSFO for October loading from Fujairah, up from 325,000 mt in August, to meet power sector demand. Consumption is expected to start gradually declining later this month, following the startup this month of the country's second LNG import terminal. First/second month Arab Gulf 180 CST HSFO swaps saw an average backwardation of $2.13/mt in September compared to 56 cents/mt in August and 62 cents/mt in July. This stronger market backwardation may also encourage traders to lower their stocks.
TransCanada has decided not to proceed with its proposed Energy East Pipeline and Eastern Mainline projects.
This follows a 30-day suspension by the company to allow it time to review changes announced by the National Energy Board regarding the list of issues and environmental assessment factors of the project.
TransCanada president and CEO Russ Girling says: 'After careful review of changed circumstances, we will be informing the National Energy Board that we will no longer be proceeding with our Energy East and Eastern Mainline applications.
'We appreciate and are thankful for the support of labour, business and manufacturing organisations, industry, our customers, Irving Oil, various governments, and the approximately 200 municipalities who passed resolutions in favour of the projects. Most of all, we thank Canadians across the country who contributed towards the development of these initiatives.
'We will continue to focus on our $24 billion near-term capital program, which is expected to generate growth in earnings and cash flow to support an expected annual dividend growth at the up end of an eight to 10% range through 2020.'
As a result of its decision not to proceed with the proposed projects, TnrasCanada is reviewing its approximate $1.3 billion carrying value, including allowance for funds used during construction capitalised since inception and expects an estimated $1 billion after-tax non-cash charge will be recorded in the company's fourth quarter results.
Occidental Petroleum and Oman Tank Terminal Company have signed a deal to store crude at the planned Raz Markaz oil terminal.
According to S&P Global Platts, an informed source said the memorandum of understanding covers up to two million barrels of Oxy's crude and possibly even US crude.
OTTCO is finalising the engineering and procurement contract for the first phase of the facility, which will comprise 25 million barrels of crude oil storage. The first phase is due to be complete by the end of 2019.
Once complete, the development could have up to 200 million barrels of crude storage aboveground and a similar amount below ground.
More than one million m3 of storage capacity is planned for a new terminal as a wave of investment targets the Port of Antwerp.
Totseanergy, the new joint venture by Total and the SEA-Invest group, will invest €100 million in the new Totseanergy Terminal at the head of the Hansa dock and the 6th harbour dock.
The project comprises eight new tanks with a capacity of 20,000 m3 each, three additional loading and unloading bays and a pipeline between the terminal and Total's refinery. The port authority will increase the depth alongside the quay to 15.5 meters.
This additional investment will give Total a combined capacity of more than 100 million m3 in 2019.
Port executives say in a statement: 'In more recent years, together with SEA-Invest, Total has played a significant role in doubling the volume of liquid bulk handled by the port. The current investment will give the refinery greater flexibility and enable it to operate more efficiently. The new tanks will take up around a quarter of the space available in the terminal, leaving plenty of room for further expansion.
'This choice by Total and SEA-Invest once more confirms the strategic position of Antwerp as a petrochemical hotspot, demonstrating the strong belief by industrial and logistics operators in the value of having a long-term presence in the port.'
Earlier in September, Antwerp Terminal and Processing Company (ATPC) broke ground for the construction of a LPG/ethane tank storage facility of 30,000 m3. The tanks are specially designed for storing ethane, propane, butane and derived products.
The terminal expects the capacity to come into operation by the middle of 2018.
Additionally, chemical company Evonik plans to invest tens of millions of euros in expanding its production capacity for special silica.