The opportunities in diversity
Zenith Energy Management’s acquisition of Arc Logistics Partners has given the company a strong foothold in the buoyant US terminal market and offers plenty of potential to seek market diversification opportunities.Comprising 21 terminals in 12 states, the acquisition in December 2017 opened Zenith up to a broad range of customers in key product markets across the country. Up until then the company owned and operated three terminal assets in Amsterdam, the Netherlands, Bantry Bay in Ireland as well as Palermo, Columbia.‘We were open to an entry point into North America and as market conditions began to evolve, we saw several opportunities,’ explains Jay Reynolds, chief commercial officer at Zenith. ‘We knew the Arc team very well and the more we examined the portfolio, the more opportunity we saw to grow and diversify the business.‘It was a great investment and we saw the potential to add economic and commercial power to grow the portfolio even further and leverage on the strong and strategic customer relationships it had to develop new opportunities.’
ILTA: Legislative champions for the tank terminal sector
As the terminal industry's leading advocate in the US, the International Liquid Terminal Association (ILTA) is focused on building a strong brand in Washington as part of efforts to expand the association's advocacy efforts.Although everyone has seen the big tanks at ports and along the highway, many policymakers and members of the public see liquid terminals as a mysterious – even unknown – part of the economy. The first job of the association is to introduce this critical industry and explain why liquid terminals are key to fueling the cars we drive and building theroads on which we drive them.The ILTA is making sure that policymakers in Washington understand the importance of this industry to trade, manufacturing, food production and the logistics of putting everyday products into the hands of consumers.
The right place & right time
Obsessive customer focus is shaping Pin Oak Terminals’ ambitious growth projects across key storage and trading markets in Texas to ensure the company’s assets complement constantly changing market dynamics.Established in 2016 with a $100 million equity investment by Dauphine Midstream and Mercuria Energy Group, Pin Oak currently has storage assets in Corpus Christi with plans underway to develop a crude oil trading hub in Taft.The company started with a four-million barrel storage facility in Louisiana, which was the first asset developed, financed, constructed and operated by Pin Oak. It sold the facility in 2018 to MPLX.Since then the company’s focus has been firmly set on developing and enhancing its storage network in and around the Corpus Christi region. Its main facility in Corpus Christi has 800,000 barrels of heated and non-heatedstorage capacity and it can handle and blend both light and heavy products. It also offers bunker blending size tanks for the growing Corpus Christi market.
A gateway to global markets
Moda Midstream is in the midst of a multi-phase expansion project to significantly expand storage capacity at its Moda Ingleside Energy Centre to grow its customer base within the US Gulf Coast.The Moda Ingleside Energy Centre (MIEC) near Corpus Christi, Texas, is one of the largest crude export terminals in the Gulf Coast region, and work is nearing completion on the construction of an additional 10 million barrels of crude oil storage as well as a further expansion of its docks.More than half of the storage expansion will be in service by the end of 2019, including several tanks that have already been commissioned and delivered early to its customers.Earlier in 2019 the company successfully commissioned upgrades to berth 2A that enables the loading of VLCCs at rates of up to 80,000 barrels per hour. Once the entire expansion is complete in the second quarter of 2020, MIEC will have combined vessel loading rates of 160,000 barrels per hour, improved berthing efficiencies and more than 12 million barrels of storage.
It's all about location
The latest storage asset acquired by Prostar Capital forms an integral part of the supply chain to one of the world’s most important storage and trading hubs.GTI Statia is well positioned along major shipping lanes serving US crude import and export markets as well as regional markets for fuel oil and refined petroleum products into the Caribbean and Latin America.In July 2019, Prostar acquired the former NuStar Energy terminal for $250 million and rebranded its name to GTI Statia. The terminal is comprised of more than 60 commercial tanks with a storage capacity of 14 million barrels (2.3 million m3), making it one of the largest independent storage terminals in the region. GTI Statia is capable of aiding a variety of customers’ needs for different products and has extensive marine infrastructure, making it one of only a handful of terminals serving the US Gulf Coast with sufficient water draft to berth fully-laden ULCC and VLCC vessels.In an interview with Tank Storage Magazine Steve Bickerton, co-founder and senior managing director at Prostar, says that the acquisition of GTI Statia enhances the firm’s investment strategy in capturing unique opportunities in the global energy supply chain, with the US Gulf Coast being one of the most important globally.‘It is all about location, location, location.'
A balancing act
As the US shifts from decades of being a net importer of oil and gas to a net exporter, there is great pressure on infrastructure to keep up with this new reality.Ramp-ups in production in the US as a whole and in the prolific Permian Basin in particular have flooded existing pipelines, storage tanks and export facilities with more product than ever before.In April, US total production surpassed 12 mmbbl for the first time ever, keeping the US as the world's top oil producer ahead of Russia, Saudi Arabia, Canada and China (based on 2018 year-end figures). The Energy Information Administration (EIA) also listed the Permian as the world's most productive basin (4.1 mmbbl/day) in April, surpassing the prolific Ghawar field (3.8 mmbbl/day). One reason for the Permian's new crown, say experts, is that Saudi Aramco's previous statements of Ghawar's production had been much higher. Therefore, a pipeline glut in west Texas is fully understandable, as rig counts can multiply faster than pipelines and storage facilities. But with a long list of new pipelines planned for the fourth quarter of 2019 and throughout 2020, the shortage in that sector may quickly turn to an oversupply, which will mean better prices for producers of gas, oil and natural gas liquids (NGLs).
Global trade tensions take their toll on oil markets
The oil market in the second half of 2019 was forced to ponder what in effect are some of its more imponderable aspects: namely, a softening of the oil price at a time of heightened global trade tension involving two of the world’s biggest consumers of crude oil, the US and China; and two major OPEC producers, Iran and Venezuela.US sanctions against Iran and Venezuela, which have virtually shut off supplies of crude oil from the two countries on to the global markets, should – on the face of it – have provided an unmistakably bullish tone to the market. Instead, crude oil prices have gone into a steep decline on fears of a global economic slowdown amid the US trade war against China. At time of writing, oil prices were close to $50 per barrel. As seekingalpha.com, thecontent service provider for financial markets observed, the first few days of August were ‘bloody and ugly for oil investors’. That month, the EIA (Energy Information Administration), part of the US Department of Energy, cut its US2019 oil demand growth forecast to 1.01 million barrels a day. This was down by 60,000 barrels per day (bpd) from the previous month’s view and was followed days later by the Paris-based IEA cutting its forecast to 1.08 million bpd from the 1.18 million bpd it predicted in July.
Pushing out US light crude to global markets
US production of crude oil has soared since 2011 through the combination of horizontal drilling and hydraulic fracturing. Fracking shale has enabled the US to become the world's largest oil producer and much of this growth has come from the resurgent Permian Basin in West Texas and New Mexico. The oil produced in shale plays such as the Permian tends to be light and sweet, different from the types of crude which most Gulf Coast refiners were designed to process, creating a mismatch. While these refiners have increased their intake of these crudes, their ability to do so is constrained by the physical characteristics of their systems. With production continuing to rise, the solution to alleviate the glut of oil being produced has been to push this oil into the export market. Projects across the Gulf Coast are underway to move this crude from the shale patch to a dock where it can be sent to markets.