Tanker loadings spell volatility for LOOP storage
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Tanker loadings spell volatility for LOOP storage

The Louisiana Offshore Oil Port holds the enviable title as the only US facility capable of fully loading a supertanker with crude.

 

US crude exports have boomed since legal restrictions on exports were lifted in late 2015. The supply of light, sweet crude far exceeds the demand by domestic refiners, many of which were configured to run on heavy, sour barrels.

 

LOOP began to fully load supertankers in February. An average loading is roughly 2 million barrels per VLCC.

 

As you can imagine, the size of this pull is significant. Enough crude must be in storage to fill the tanker. Those same tanks must then be replenished afterwards.

 

This dynamic is most pronounced at LOOP, but other Gulf Coast ports are looking to develop the capability to fully load VLCCs (more below).

 

A glance at LOOP crude inventories in 2018 shows some notable spikes, likely attributed to VLCC loadings (Figure 1).

 

Figure 1

Source: Ursa

 

There were nine VLCC loadings from LOOP in 2018, according to our friends at ClipperData.

 

Interestingly, many of the large, abrupt draws in LOOP storage last year occurred around the same time as VLCC loading dates.

 

Figure 2 shows the graph above combined with each VLCC loading (orange dot).

 

Figure 2

Source: Ursa, ClipperData

 

 

Not every loading has had a similar impact on storage partly because LOOP is also an import facility. Inward flows can mitigate the effects of a supertanker-loading.

 

LOOP has eight underground caverns a third of a mile below the earth’s surface in a natural salt dome. Total capacity equals 60 million barrels of crude, according to the LOOP website.

 

There are also 15 above-ground storage tanks capable of storing approximately 12 million barrels.

 

The LOOP storage data calculated by Ursa using satellite-based synthetic aperture radar includes both storage tanks and underground caverns.

 

The Clovelly Hub facility is located 23 miles inland from Fourchon, Louisiana. Pipelines connect Clovelly Hub with Fourchon and Fourchon with the LOOP Marine Terminal.

 

The LOOP Marine Terminal sits 18 miles offshore in the Gulf of Mexico. Ships park there using one of three single-point moorings. A hose connecting the ship and pipeline under the sea floor allows for the transfer of crude oil.

 

Seven proposed projects are vying to become Gulf Coast deepwater ports and to capitalize on recent trends.

 

US crude exports averaged almost 2 million barrels per day (bpd) in 2018, up from roughly 1 million bpd in 2017 and 500,000 bpd in 2016, according to US Energy Information Administration data.

 

For any one of these seven projects under consideration, getting to the finish line won’t be easy. 

 

Regulatory approvals are required, for example. Any plan that involves dredging a harbor is certain to raise opposition from environmentalists, a potential roadblock.

 

Ironically, LOOP’s relatively smooth ride to becoming an export hub can be explained by its origins.

 

The facility was designed decades ago to offload the world’s biggest crude tankers to ensure Gulf Coast & Midwest refiners had enough fuel to operate.

 

Those ships still arrive at LOOP, but in addition, tankers now depart from LOOP. It was simply a matter of retrofitting the place to allow for crude to flow in both directions.

 

Is there a more dynamic place in the oil world right now than the US Gulf Coast?

 

 

 

 

 

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