TMX oil specs inappropriate: Valero, Chevron
Crude quality specifications on the Trans Mountain Expansion (TMX) pipeline in western Canada are not narrow enough and may prevent buyers in California from taking crude shipped on the recently commissioned system, according to two US refiners.
The 590,000 b/d TMX pipeline was placed into service on 1 May, a welcome addition for both producers in Alberta and refiners on the Pacific rim, but the upper limits allowed for crude on the line relating to vapor pressure and Total Acid Number (TAN) are problematic, Chevron and Valero said in letters to the Canada Energy Regulator (CER) on 10 May.
The specifications, as set out by Trans Mountain's rules and regulations, were already in place for the original 300,000 b/d crude pipeline, or Line 1, which also carries refined products that require a higher vapor pressure. TMX, or Line 2, will primarily cater to heavy crude shippers.
But the vapor pressure limit of 103 kPa at 37.8°C on the new line is nearly 40pc higher than tanks allow, according to Valero.
"High vapor pressure crude oil simply cannot be accepted in United States internal floating roof tanks," wrote Valero. The current limits are "wholly inappropriate" and will result in crude being transported through TMX that is not suitable for the west coast market.
Chevron concurred that the specifications exceed the limit for storage tanks at its own California refineries in Richmond and El Segundo.
"Failure to amend the TAN specification and vapor limits for TMPL may prevent Chevron from purchasing or processing crude from [Trans Mountain] for our California refineries," the company wrote.
The letters were in support of a 12 April complaint by Canadian Natural Resources (CNRL) to the CER, requesting the regulator intervene. Fellow oil sands producers Suncor, Imperial Oil, MEG Energy and ConocoPhillips also wrote in support, as did industry groups Explorers and Producers Association of Canada (EPAC) and Western States Petroleum Association (WSPA).
Current rules state crudes must have a TAN of less than 1.3mg KOH/g to be considered a Low TAN Dilbit, but that is "inappropriately high," according to CNRL, and should be brought down to the same 1.1mg KOH/g threshold set by other export pipelines.
Cenovus and Plains Midstream wrote that the CER did not need to intervene as this was a commercial matter.
"This is effectively a commercial dispute that should be dealt with between the sophisticated commercial entities involved," said Plains.
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Francine spurs more US Gulf oil shut-ins: Update 2
Francine spurs more US Gulf oil shut-ins: Update 2
Update with BSEE production data. New York, 11 September (Argus) — US energy producers curtailed nearly 39pc of offshore Gulf of Mexico oil production as Hurricane Francine bore down on the Louisiana coastline today. About 674,833 b/d of offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE). Around 907mn cf/d of natural gas production, or 49pc of the region's output, was also off line. Operators evacuated workers from 171 platforms. Companies including Chevron, ExxonMobil and Shell relocated offshore workers and suspending some drilling operations ahead of the hurricane. Ports along the hurricane's path announced traffic restrictions in advance, with some setting out plans to close until it passes, including the port of New Orleans. Francine was last about 60 miles south-southwest of Morgan City, Louisiana, according to a 4pm ET update from the National Hurricane Center. Maximum sustained winds were reported at 90mph. The hurricane is set to make landfall in Louisiana by this evening before moving north across Mississippi on Thursday. Rapid weakening is forecast and Francine is expected to be a post-tropical system on Thursday. With the hurricane's track locked in on Louisiana, the port of Houston reopened to all vessel traffic at 1pm ET Wednesday, a ship agent said, after closing Tuesday afternoon. The Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham and Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Francine sets sights on Louisiana coast: Update
Francine sets sights on Louisiana coast: Update
Updates the status of ports in Texas. New York, 11 September (Argus) — Hurricane Francine, which has already shut in almost a quarter of the Gulf of Mexico's oil output, is set to strengthen before making landfall in Louisiana on Wednesday evening. Francine was about 150 miles southwest of Morgan City, Louisiana, according to an 10am ET advisory from the National Hurricane Center, with maximum sustained winds of 90 mph. The hurricane will bring 5-10 foot storm surge to coastal areas from Vermillion Bay to Port Fourchon, Louisiana, and after landfall is expected to move northward across Mississippi on Thursday and Thursday night bringing heavy rains. Ports along the hurricane's path announced traffic restrictions in advance, with some setting out plans to close until it passes, including the port of New Orleans . With the storm's track locked in toward Louisiana, the port of Houston was expected to reopen to inbound vessels at 1pm ET today and to outbound vessels at 3:30pm, a ship agent said. It closed to traffic at 1pm Tuesday. The ports of Beaumont, Port Arthur and Orange also plan to reopen Wednesday. About 412,070 b/d of offshore oil output was off line by midday on Tuesday, according to the Bureau of Safety and Environmental Enforcement (BSEE), as offshore operators including Chevron, Shell and ExxonMobil evacuated workers and curbed operations as a precaution. About 494mn cf/d of natural gas production, or 26pc of the region's output, was also off line. The Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham and Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hurricane Francine sets sights on Louisiana coast
Hurricane Francine sets sights on Louisiana coast
New York, 11 September (Argus) — Hurricane Francine, which has already shut in almost a quarter of the Gulf of Mexico's oil output, is set to strengthen before making landfall in Louisiana on Wednesday evening. Francine was about 195 miles southwest of Morgan City, Louisiana, according to an 8am ET advisory from the National Hurricane Center, with maximum sustained winds of 90 mph. The hurricane is expected to become a category 2 storm, with winds between 96-110mph, and will bring 5-10 foot storm surge to coastal areas from Vermillion Bay to Port Fourchon, Louisiana. After landfall, the center is expected to move northward across Mississippi on Thursday and Thursday night bringing heavy rains. Ports along the hurricane's path announced traffic restrictions in advance, with some setting out plans to close until it passes, including the port of New Orleans . About 412,070 b/d of offshore oil output was off line by midday on Tuesday, according to the Bureau of Safety and Environmental Enforcement (BSEE), as offshore operators including Chevron, Shell and ExxonMobil evacuated workers and curbed operations as a precaution. About 494mn cf/d of natural gas production, or 26pc of the region's output, was also off line. The Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
No change to oil use soon, transition just began: Appec
No change to oil use soon, transition just began: Appec
Singapore, 11 September (Argus) — Fossil fuel use is not going to change much in the next few years as the energy transition is just beginning, delegates said at the S&P Global Commodity Insights Appec conference in Singapore this week. About 84-85pc of our energy is fossil fuel and that number has remained unchanged for the last 30 years, trading firm Gunvor chairman Torbjorn Tornqvist said. "If I look around, what I see today, is not going to be much different [in 2030]." "The oil industry is being blamed for everything in this respect — the solution seems to be just stop drilling," Tornqvist said. "Clearly, that is not the way." US private equity fund Carlyle's chief strategy officer of energy pathways Jeff Currie thinks the world is "not even in chapter one" of the energy transition story. "We're still, I think as Torbjorn says, at 84pc fossil fuels — that means we're in the introduction. We're not even in chapter one. We got a long way to go." The problem seems to be the "unrealistic targets" that countries and companies have set for themselves in their quest to move away from fossil fuels and lower emissions. "Or you put the target, but you don't put the resources to achieve those targets," Tornqvist said. "It doesn't matter how much we want it. The cost of the energy transition is not fully understood, and it needs to be communicated." But there are ways to go about this. "Solar power is, I think, actually extremely cheap," Tornqvist said. "So there are solutions. The problem is it's not big enough." Another issue is that the transition away from fossil fuels is being largely driven by subsidies, Currie added. "Looking at all the politics and elections everywhere in the world, it's more driven by subsidies — more carrots and less sticks." Southeast Asian countries like Singapore and Thailand have turned to carbon taxes to get producers and consumers to factor in the cost of carbon when making decisions — but the question is whether they should be set higher to be effective. "That would be optimal, but it's unlikely to happen," Currie said. "I think market-based solutions are becoming a thing of the past these days." The pace of renewables growth in Asia is an issue, meaning oil may need to be around for longer. "I strongly believe even in 2050, oil products will take a very important and critical role in the society, especially for Japan," Japanese refiner Taiyo Oil's president and chief executive Takahiro Yamamoto said. "We have very limited renewable energy in our country at this moment." Yamamoto is not worried about oil demand falling even as Japan's population continues to shrink because of the number of refineries that have shut down in the country, threatening oil product supply including transport fuels like conventional jet fuel. "So many refineries have been shut down in the past 10 years. I'm very anxious about how we can keep this supply ability as a country," Yamamoto said. "That's my concern, rather than the shortage of demand or consumption decreasing." But delegates agree it is going to take a while to get to net zero and not everyone is going to get there at the same time. "I think it's a race that will take from now [a] minimum of 10 years," said Kuwait's state-owned KPC managing director of international marketing Shaikh Khaled Ahmad Al Sabah. Not everyone can afford it in some countries, he added. "It needs a lot more investment. It will have a lot of cost. Economics is a big, strong factor in this one." By Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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