Three very large crude carriers and three Suezmax tankers are currently chartered as storage vessels, ICAP showed in a table of VLCC storage.

There has been a resurgence in the use of vessels for floating storage off the Gulf coast in the last two months ahead of the release of some 30 million barrels of crude oil from the U.S. strategic petroleum reserve.

A lack of onshore storage capacity in light of the influx of crude oil has encouraged owners to seek alternative means of storage, ship brokers said.

-By Sarah Kent, Dow Jones Newswires

Over the next 30 days, the U.S. government and its partners in the International Energy Agency will release 60 million barrels of oil onto the world market, the Department of Energy said in a statement.

“We are taking this action in response to the ongoing loss of crude oil due to supply disruptions in Libya and other countries and their impact on the global economic recovery,” Energy Secretary Steven Chu said in a statement.

The administration has faced growing pressure in recent months to release oil from the reserves as unrest has pushed gas prices upward. The administration–up until now–had declined to tap into the reserves, saying the stored oil should only be released during major supply disruptions.

The reserves now hold 727 million barrels of oil, a historic high, according to the DOE.

The average price of regular gas is $3.61 in the U.S.

The DOE said its decision is intended to complement production increases recently announced by other countries. “The United States welcomes those commitments and encourages other countries to follow suit,” the DOE said in a statement.

-By Jared A. Favole, Dow Jones Newswires

The spending frenzy is driven in part by high oil prices, which recovered quickly from the financial crisis and in 2011 rose once again above the benchmark of $100 per barrel in the midst of unrest in the Arab world. But it is also due to the fact that oil has become harder to find, and oil giants have realized that they must spend more in order to keep their production going, Barclays said in its semiannual Global Exploration and Production Capital Spending Update.

Excluding acquisitions, the reserves replacement ratio of the largest oil companies–such as Royal Dutch Shell PLC (RDSA, RDSA.LN), Exxon Mobil Corp. (XOM) and Total S.A. (TOT, FP.FR)– “has been challenging in the past decade or so,” said Barclays oil-services analyst James West.

Oilfield-service providers, such as Baker Hughes Inc. (BHI), Schlumberger Ltd. (SLB) and subsea equipment maker Cameron International Corp. (CAM), would be among those to benefit from a continued expansion as oil companies spend more on drilling costly deep-water wells and fracturing North American shale formations. West said oilfield-service companies’ ability to handle new orders–their “spare capacity”–will “mostly be erased by the end of this year.”

The biggest oilfield-service companies–Schlumberger, Baker Hughes, Halliburton Co. (HAL) and Weatherford International Ltd. (WFT)–raised their capital expenditures by 40% this year, “trying to keep pace with growth and spending,” West said in an interview.

Barclays expects double-digit percentage annual growth rates in international spending by oil companies through 2015. In North America, annual growth in spending during the same period will be in the high single digits on a percentage basis.

“We continue to believe the oil-service industry is in the early stages of a major international and offshore upcycle that is currently taking hold,” Barclays analysts said in a research note.

Barclays said it forecasts the oil industry to spend $529 billion, versus $458 billion in 2010, a 16% increase.

The forecast is a revision from a previous estimate released last December which projected 2011 spending to reach $490 billion. Barclay’s spending update is a widely followed snapshot of industry-wide spending projections. Actual spending, Barclays said, is “likely to exceed current expectations.”

Risk factors still cloud Barclay’s predictions, however. Weakening economic conditions could bring down oil prices, the main reason for the boom in exploration and production spending. Also, environmental and legal challenges could keep a lid on investment in the U.S. Gulf of Mexico, the site last year of the largest offshore spill in U.S. history.

Oil companies are basing their 2011 capital-spending budgets on an average oil price of $87 per barrel of West Texas intermediate crude. That is $10 higher than their early December expectations. Barclays forecasts WTI prices to average $106 per for 2011, $137 per barrel for 2015 and $185 per barrel for 2020.

Oil futures in New York ended 2.1% lower at $97.21 per barrel on Monday.

-By Angel Gonzalez, Dow Jones Newswires

Technorati Tags:
oil, offshore, transportation

They write:

In 2007, total world oil production amounted to approximately 85 million barrels per day (bbl/d), and around one-half, or over 43 million bbl/d of oil was moved by tankers on fixed maritime routes. The international energy market is dependent upon reliable transport. The blockage of a chokepoint, even temporarily, can lead to substantial increases in total energy costs. In addition, chokepoints leave oil tankers vulnerable to theft from pirates, terrorist attacks, and political unrest in the form of wars or hostilities and shipping accidents which can lead to disastrous oil spills.

In case that’s not enough to sustain high oil prices Fred Fry points us to this ABC nightline story on the world mariner shortage, a problem we at gCaptain can testify as real and already creating problems. They write:

The Warsash Maritime Academy trains 200 pilots and skippers a year to man an ever-expanding global fleet of super tankers.

They’ll take the helm of some of the 6,000 new oil tankers and container ships will hit the water in the next five years. Why so many? Because of our continued reliance on oil, China’s manufacturing boom and because, well, no one has come up with a better idea.

“It takes a long, long time to train somebody to be in charge of it,” said Sadler. Shipping is booming, ships are getting bigger and harder to handle, and there aren’t enough men and women to take charge of the ships.

“There is now a gap in qualified personnel,” Sadler said.

Continue Reading…

Both these articles lead to one question: Could a ship with crew lacking experience shut down a harbor, or worse a choke point?