"Excess" US Refinery Products Need To Be Exported
Posted: Fri 31 May 2013, 15:23:27
This thread touches on several others we’ve been bouncing around. We’ll see if this one has the legs to run for a while. Some POTENTIAL dot connecting as I see it. The most important dot to appreciate IMHO: any foreign oil shipped to the US can be re-exported to another country. This is already going on at a very small scale with oil being sent from the US to China. This is not US policy but LAW. Not 100% sure but I believed it’s linked to US trade agreements with other countries and, as such, might be very difficult to alter IMHO. So if oil from the Canadian oil sands, which may belong to a Chinese company, is pipelined to the Texas Gulf Coast it could be shipped to China via the Panama Canal. Which is currently undergoing expansion to handle the very large tankers.
Now refined products: if the oil that is shipped into the US is owned by a foreign company and is then run thru a refinery that is also owned by foreign companies but happens to be located in Texas, it would seem logical that those products could be shipped out of the US to any other country the refinery choses. Of course, this refers to the Motiva refinery in Port Arthur, Texas, which is owned jointly by Royal Dutch Shell and Saudi Arabia. A refinery that was redesigned (in the largest upgrade in the history of the country) specifically to handle Saudi and Canadian oil sand production. They did initially stumble by having some piping issues but those have been fixed for the most part. Of course, shipping oil into the US and refining it is one thing. You still need the facilities to ship those products out of the country. So from: http://www.downstreamtoday.com/news/art ... a_id=39668
Enterprise Unveils Plans for Texas Refined Products Export Facilities
“Enterprise Products Partners Thursday announced the partnership is developing two refined products export facilities to meet the growing demand for additional refined products export capability on the United States Gulf Coast. By utilizing Enterprise’s existing refined products pipeline, storage and terminal facilities in southeast Texas, Enterprise will provide customers with significantly improved access to its marine facilities at its ports in Beaumont, Texas and on the Houston Ship Channel. Export service at the Beaumont marine terminal will initially handle Panamax size vessels and is expected to begin service in the first quarter of 2014, followed in mid-2014 by its expanded marine terminal on the Houston Ship Channel that will be initially sized to handle up to Aframax class vessels.”
And where have they been shipping products to?
“Enterprise has traditionally served as a feeder system which delivers refined products to the Midwest. Over the past year, Enterprise has repurposed its Southern Complex in order to increase supply and market access, system flexibility and capacity. Storage capacity at the partnership’s Southern Complex facilities has more than doubled to approximately 12 million barrels; key pipeline segments serving major refining centers have been made bi-directional; and new interconnects provide access to major, third party interstate pipeline systems. The Southern Complex is directly connected for refined product receipts from the Colonial Pipeline and 10 refineries in southeast Texas, representing 3.3 million barrels per day of refining capacity. In addition, the Southern Complex offers access to three interstate pipelines and one intrastate pipeline. Enterprise’s Southern Complex provides its customers with enhanced flow assurance and market choices.” Key words IMHO: repurpose; flexibility; bi-directional; new interconnects; market choices.
IOW they have a great flexibility to ship up to 3.3 million bbls of product every day to whoever can pay the max price. Maybe consumers in NYC, Kansas City or maybe in Beijing.
“We are excited to announce our vertical integration into refined products export services,” said Michael A. Creel, chief executive officer of Enterprise’s general partner.” Key words IMHO: “vertical integration”. If you aren’t familiar with that biz model you might want to research it.
“This expansion is driven by the tremendous growth of U.S. crude oil production from the development of the shale plays coupled with an increase in Gulf Coast refining production and strong international demand for U.S. refined products.
And despite this tremendous growth we still import more than 6 million bopd. So what exactly does increased domestic production have to do with exporting product? Oh..yeah: "...an increase in Gulf Coast refining production and strong international demand...". Now I understand...the increased US oil production has nothing to do with exporting product.
"In five short years, the United States has transitioned from importing approximately 1 million barrels per day (“MMBbls/d”) of refined products in 2007 to exporting more than 1 MMBbls/d in 2012, with most of these exports supplied by refineries on the Gulf Coast. I would like to congratulate our commercial, engineering and operations team for the development of this capital efficient plan to repurpose and expand existing facilities including the reactivation of our marine facility in Beaumont.” There's that little word again: repurpose. Maybe it's like "re-gifting" our products and sending them to China for Christmas?
IOW: Don’t worry folks: watch my left hand with all that excess Bakken/Eagle Ford oil we have and the oversupply of products that have “forced” us to export that excess. It has nothing to do with the POD and the increasing value of products on the international market. A market that the new export facilities and a wider canal will allow greater access to. No need to pay any attention to my right hand with that imported oil being turned into products that are being shipped out of the country. Even as an oil patch insider that sort of spin irritates me some. But I guess they don’t have the nerve to tell the American people the plan is to put our consumers in more direct completion with foreign consumers. After all, we're trying to do it with NG so why not refined products. We may still get all those products for ourselves…as long as we’re willing to outbid those other new potential buyers.
You don’t think the potential of all those Chinese refinery JV’s to eventually remove product from the international market is a factor in this export expansion? Naa…just a coincidence I’m sure.
Now refined products: if the oil that is shipped into the US is owned by a foreign company and is then run thru a refinery that is also owned by foreign companies but happens to be located in Texas, it would seem logical that those products could be shipped out of the US to any other country the refinery choses. Of course, this refers to the Motiva refinery in Port Arthur, Texas, which is owned jointly by Royal Dutch Shell and Saudi Arabia. A refinery that was redesigned (in the largest upgrade in the history of the country) specifically to handle Saudi and Canadian oil sand production. They did initially stumble by having some piping issues but those have been fixed for the most part. Of course, shipping oil into the US and refining it is one thing. You still need the facilities to ship those products out of the country. So from: http://www.downstreamtoday.com/news/art ... a_id=39668
Enterprise Unveils Plans for Texas Refined Products Export Facilities
“Enterprise Products Partners Thursday announced the partnership is developing two refined products export facilities to meet the growing demand for additional refined products export capability on the United States Gulf Coast. By utilizing Enterprise’s existing refined products pipeline, storage and terminal facilities in southeast Texas, Enterprise will provide customers with significantly improved access to its marine facilities at its ports in Beaumont, Texas and on the Houston Ship Channel. Export service at the Beaumont marine terminal will initially handle Panamax size vessels and is expected to begin service in the first quarter of 2014, followed in mid-2014 by its expanded marine terminal on the Houston Ship Channel that will be initially sized to handle up to Aframax class vessels.”
And where have they been shipping products to?
“Enterprise has traditionally served as a feeder system which delivers refined products to the Midwest. Over the past year, Enterprise has repurposed its Southern Complex in order to increase supply and market access, system flexibility and capacity. Storage capacity at the partnership’s Southern Complex facilities has more than doubled to approximately 12 million barrels; key pipeline segments serving major refining centers have been made bi-directional; and new interconnects provide access to major, third party interstate pipeline systems. The Southern Complex is directly connected for refined product receipts from the Colonial Pipeline and 10 refineries in southeast Texas, representing 3.3 million barrels per day of refining capacity. In addition, the Southern Complex offers access to three interstate pipelines and one intrastate pipeline. Enterprise’s Southern Complex provides its customers with enhanced flow assurance and market choices.” Key words IMHO: repurpose; flexibility; bi-directional; new interconnects; market choices.
IOW they have a great flexibility to ship up to 3.3 million bbls of product every day to whoever can pay the max price. Maybe consumers in NYC, Kansas City or maybe in Beijing.
“We are excited to announce our vertical integration into refined products export services,” said Michael A. Creel, chief executive officer of Enterprise’s general partner.” Key words IMHO: “vertical integration”. If you aren’t familiar with that biz model you might want to research it.
“This expansion is driven by the tremendous growth of U.S. crude oil production from the development of the shale plays coupled with an increase in Gulf Coast refining production and strong international demand for U.S. refined products.
And despite this tremendous growth we still import more than 6 million bopd. So what exactly does increased domestic production have to do with exporting product? Oh..yeah: "...an increase in Gulf Coast refining production and strong international demand...". Now I understand...the increased US oil production has nothing to do with exporting product.
"In five short years, the United States has transitioned from importing approximately 1 million barrels per day (“MMBbls/d”) of refined products in 2007 to exporting more than 1 MMBbls/d in 2012, with most of these exports supplied by refineries on the Gulf Coast. I would like to congratulate our commercial, engineering and operations team for the development of this capital efficient plan to repurpose and expand existing facilities including the reactivation of our marine facility in Beaumont.” There's that little word again: repurpose. Maybe it's like "re-gifting" our products and sending them to China for Christmas?
IOW: Don’t worry folks: watch my left hand with all that excess Bakken/Eagle Ford oil we have and the oversupply of products that have “forced” us to export that excess. It has nothing to do with the POD and the increasing value of products on the international market. A market that the new export facilities and a wider canal will allow greater access to. No need to pay any attention to my right hand with that imported oil being turned into products that are being shipped out of the country. Even as an oil patch insider that sort of spin irritates me some. But I guess they don’t have the nerve to tell the American people the plan is to put our consumers in more direct completion with foreign consumers. After all, we're trying to do it with NG so why not refined products. We may still get all those products for ourselves…as long as we’re willing to outbid those other new potential buyers.
You don’t think the potential of all those Chinese refinery JV’s to eventually remove product from the international market is a factor in this export expansion? Naa…just a coincidence I’m sure.