Oil Driving More Gulf Ship Traffic

Posted by PortVision

Shipping traffic is on track to grow in the Gulf of Mexico due to continuing increases in US oil mining output. According to the US Environmental Protection Agency, the ports of South Louisiana and Houston are two of the ten busiest ports in the world. Six of the top ten sea ports in the US are located on the Gulf. With the opening next year of the newly expanded Panama Canal, we can expect more vessels crossing the Gulf from that source, too.

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The January 7, 2013 Short Term Energy Outlook Report of the US Energy Information Administration (EIA) anticipates that the US and Canada will supply 70% of the total non-OPEC supply of liquid fuels in 2014. This is a 13% increase for the US which produced an average of 7.5 million bbl/d in 2013;  this 8.5 million bbl/d mark in 2014 is expected to increase again in 2015 to 9.3 million bbl/d – the highest annual average level of production since 1972, and a third more than only 6 years ago. By 2016, US production of oil and associated materials will pass the record set in 1970. In January, 2013, The Motley Fool suggested that the US could become energy independent by 2020.

The EIA expects that onshore drilling in the Bakken formation in North Dakota and Montana, the Eagle Ford formation in Texas, and the Permian Basin in Texas and New Mexico will drive this growth. Eagle Ford accounts for more than half of onshore domestic production growth from its oil and gas wells. However, offshore oil production is also expected to increase by 2015 due to a number of projects which will come onstream by 2015.

Pipeline expansions have increased capacity for the shipment of crude oil to the Gulf Coast.  Onshore and offshore production will drive changes in the logistics of global oil trade and shipping. More oil means more competitive prices and more oil available to export to the energy hungry Pacific Rim countries.

The Journal of Commerce posited in May, 2013, that Gulf ports, in particular, will need substantial infrastructure expansion due to this increase in production. Energy and transportation firms now plan to spend more than $223 billion on new pipelines, rail lines, storage tanks and refineries. A corresponding inflow of funds will allow the Gulf Coast to ship gas to Europe and to Asia through the expanded Panama Canal. The executive director of the Port of Corpus Christi, John LaRue, indicated that more port development is occurring now than he has seen in 18 years.

More outbound shipments of crude oil to US coastal refineries, as well as to foreign ports (with licenses) such as to refineries in Quebec, are already being handled by Corpus Christi. The same Journal of Commerce article lists a number of new plant investments expected to produce LNG for the export market which will be shipped through Corpus Christi: Chenier Energy has permits to build a new $10 billion LNG plant (the Corpus Christi Liquefaction Project) which will be completed by 2017. Indonexian Pertamina has already signed an agreement to purchase LNG from Chenier. Texas LNG has  applied for export permits for Asian Pacific sales hoping to begin those exports by 2018.

LyondellBasell is investing $400 million to build a petrochemical plant at the port. M&G Group plans a $1 billion plant at the port. Voestalpine will begin the first phase of a plant at the port's La Quinta Ship Channel. Tianjin Pipeline is beginning a $1.3 billion plant to build pipes to supply new US pipeline needs.

Valero Energy, the world's largest independent refiner with a heavy concentration of its plants on the Gulf Coast, has reversed the flow of its pipeline to its storage tanks at the port for domestic refining. Valero expects most Corpus Christi refineries will be refining US crude oil rather than imports in less than five years. At present, Valero receives about 90% of its crude oil domestically, from Eagle Ford. It is now looking to add topping units at both its Houston and Corpus Christi refineries which are planned to come online in 2015.

In addition to the increase of activity in Corpus Christi, Houston area refineries are building new liquid bulk facilities. The Greater Houston Port Bureau stated that 40% of the energy companies located along the Houston Ship Channel plan to invest $28.8 billion by 2016 to handle domestic and export markets. With the expected ability of the Panama Canal to handle more traffic next year, Houston anticipates ships that formerly would stop in West Coast ports, will continue on to the Gulf, rather than offloading cargo to be shipped east over land.

PortVision currently provides pervasive AIS-based vessel tracking and business intelligence across the Gulf of Mexico region, including offshore.  We serve over 2,000 users in the region, providing real-time operational support and over 5 years of historical reporting and analysis pertaining to vessel movements, dock arrivals and departures, and overall maritime domain awareness.  We remain committed to supporting significant industry change with a focus on R&D and industry initiatives that help our customers navigate the changes ahead. 

For more information on our perspective at PortVision regarding trends in AIS-based ship tracking, see our CEO’s predictions on vessel tracking trends in 2014.

PortVision 360 AIS Vessel Tracking

Posted on Feb 18, 2014, 3:45:00 PM

Topics: Blog