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By Javier Blas and Dan Murtaugh (Bloomberg) — The flood of crude leaving the U.S. could be about to get a major boost: the nation’s top imports terminal is testing one of the industry’s biggest tankers to load an export cargo for the first time.
If the trial run signals the start of regular exports from Louisiana Offshore Oil Port, it will be a step change in America’s capacity to export the burgeoning production that’s roiled global oil markets. The ability to load very large crude carriers, the industry term for giant ships able to carry two million barrels, will significantly cut the cost of shipping cargoes overseas.
On its website, the terminal said it’s testing a supertanker following modifications last year to allow crude exports. Shipping data compiled by Bloomberg and cargo tracking firm Kpler show the tanker is the Saudi Arabian-owned Shaden, chartered by China’s largest oil trader last month.
LOOP has been a vital piece of U.S. energy infrastructure for more than 30 years, handling imports from across the world as well as gathering crude pumped from deepwater deposits in the Gulf of Mexico.
LOOP LLC moored the supertanker and “initiated its detailed test and checkout procedure,” the operator said on its website, without elaborating. The company said in July that it would seek customer interest in loading services, modifying its facilities to allow the port to operate “bi-directionally” to handle exports.
Infrastructure such as pipelines and ports has become the biggest bottleneck in U.S. oil exports, with traders at times engineering logistically complex chains combining railways, trucks, pipelines, barges, and a ship-to-ship transfers to get the crude out of the country. As U.S. output surpasses the record high of 10 million barrels a day set in 1970, trading houses, pipeline owners and ports are investing in new infrastructure to ship more American crude overseas.
While U.S. crude has already been exported using supertankers, other ports are too shallow to allow full loadings, meaning smaller ships must shuttle multiple cargoes to the giant vessels as they wait to load offshore. LOOP, because of the depth of the waters around it, would allow the industry’s largest tankers to load in one go.
The tanker Shaden is owned by the National Shipping Co. of Saudi Arabia, according to data from IHS Maritime. It left the Middle East country’s biggest export terminal on about Dec. 20, delivering its cargo to the U.S. Gulf of Mexico earlier this month.
The carrier was booked last month by Unipec, China’s biggest trader, charter data compiled by Bloomberg show. Unipec is a unit of China Petroleum & Chemical Corp., or Sinopec, China’s largest oil refiner. A Sinopec spokesman declined to comment.
It’s unclear which grade of crude Shaden will load. LOOP is connected by a 48 inch pipeline to a storage hub at Clovelly, 25 miles inland, which normally feeds U.S. refineries.
Washington lifted a 40-year ban on most oil exports in late 2015, in the process reshaping the world’s energy map with U.S. crude being sent to locations including Switzerland, China, Israel and even Arab oil rich nations such as the United Arab Emirates. The de facto export ban, which only allowed a few exceptions, was imposed in the aftermath of a 1973 to 1974 oil embargo led by Saudi Arabia.
Since the ban was lifted, U.S. crude oil exports have surged to a record high of 2.1 million barrels, up from a trickle a decade ago. China and other Asian nations have become big buyers of U.S. crude.
© 2018 Bloomberg L.P
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