U.S. shale oil trade goes waterborne in 2014, says Freepoint ("logistical bottlenecks")

Reuters ^ | November 7, 2013 | Jeanine Prezioso, Editor, North American Power & Gas Forum

[2ndDivisionVet]

In 2012, it was the oil tanker-truck trade. This year, the oil-by-rail boom inundated the U.S. East and Gulf coasts. In 2014, the shale revolution hits the water, says U.S. commodity merchant Freepoint Commodities.

A dramatic slump in U.S. cash crude prices in recent weeks has vividly shown that the unrelenting rise in shale oil production from North Dakota and Texas is rapidly nearing the point of saturation for Gulf Coast refiners, likely forcing more and more cargoes up the East Coast on tankers.

The swell of crude emerging from the Bakken in North Dakota, plus the Eagle Ford and Permian basins in Texas, has created rippling shockwaves for oil traders, with logistical bottlenecks emerging with each expanding wave, Brison Bickerton, head of strategy for Stamford, Connecticut-based Freepoint, told the Reuters Commodity Summit this week.

First came the need for oil tank trucks to ferry crude from small shale wells to larger gathering stations, tanks or terminals. As more and more oil-by-rail terminals came online and pipelines were built, that crude flowed swiftly and easily to refiners across most of the United States...

[MUDDOG]

There are still refineries in New Jersey and Pennsylvania, though not as many as before.

They're apparently refining imported crude now.

[CarmichaelPatriot]

Isolationist as it may be, there’s no good reason for the USA to export any raw materials to nations that may use them against us, either militarily or economically.

[okie01]

There are still refineries in New Jersey and Pennsylvania, though not as many as before. They're apparently refining imported crude now.

Moving shale oil by tanker from the Gulf to the East Coast may not be economically feasible.

Shipments between two U.S. ports must be handled by U.S. flagged tankers with union crews -- a comparatively expensive proposition. More likely that the shale oil is shipped to Trinidad, Puerto Rico or other Caribbean sites for refining, then trans-shipment to the East Coast.

[MUDDOG]

However, they may have stuff we need, so you have to look at it on a case-by-case basis, but what you say is a good general principle.

What worries me more than strategic materials, is the danger of a massive electromagnetic pulse knocking out our electric infrastructure. There was one in 1859 from the sun which would be disastrous today; back then it only fried the telegraph.

If we got a similar one today, it would take months, if not years, to recover, because we have not hardened our infrastructure, and we don't have enough spare parts to replace the fried equipment.

I'm no expert, so hopefully I'm being needlessly alarmist.

[MUDDOG]

Good point. The article seems to indicate that it would be actual crude going up the East Coast, but who knows.

[okie01]

The article seems to indicate that it would be actual crude going up the East Coast, but who knows.

The article also referenced Freepoint building up its barge operations and tank storage in the Houston Shipping Channel.

Evidently, the excess shale crude will travel by barge via the Inland Waterway. At which point, a pipeline from Panama City to Jacksonville would start to make a lot of sense...

[laplata]

I’m no expert, so hopefully I’m being needlessly alarmist.
-
You are not being needlessly alarmist.

All that stimulus money would have hardened our infrastructure and done real good in a lot of ways.

[MUDDOG]

Sounds good.

Makes me think of the Canal du Midi in France. It cut across France connecting the Atlantic and the Mediterranean in the 17th century and saved the sea trip around Spain. It was a tremendous achievement.

[MUDDOG]

I was afraid of that.

[laplata]

It’s scary. We no longer have anyone in power who looks after America and puts it’s best interests at heart. In many ways we are now at the mercy of some very evil people.

[gnarledmaw]

Not alarmist enough. I was watching some “expert” talking about a situation that would fry the transformers. Most utilities don’t have many on hand and he figured it would be two years MINIMUM to get it all back up and running.

[thackney]

They're apparently refining imported crude now.

And have been for quite a while.

[thackney]

Moving shale oil by tanker from the Gulf to the East Coast may not be economically feasible.

It is. It is ongoing. We are not talking about supertankers but barges and relatively small tankers.

Eagle Ford oil transforming Corpus Christi port
http://www.freerepublic.com/focus/f-news/3093011/posts

More likely that the shale oil is shipped to Trinidad, Puerto Rico or other Caribbean sites for refining, then trans-shipment to the East Coast.

Nope, export of crude oil is quite limited.

Nearly all (the little bit) that leaves the country goes to the closest refinery in Canada.

Crude Oil Exports by Destination
http://www.eia.gov/dnav/pet/pet_move_expc_a_EPC0_EEX_mbblpd_m.htm

Notes:
Crude oil exports are restricted to:

(1) crude oil derived from fields under the State waters of Alaska's Cook Inlet;

(2) Alaskan North Slope crude oil;

(3) certain domestically produced crude oil destined for Canada;

(4) shipments to U.S. territories; and

(5) California crude oil to Pacific Rim countries.