Posts Tagged Oil tanker
Crude Landlocked as Canadians Join U.S. to Halt Pipelines
By Jeremy van Loon & Christopher Donville - May 24, 2013 3:26 AM CT
British Columbia, the Canadian province whose official slogan to its own beauty is “Super, Natural,” is invoking another saying: “No more supertankers.”
That’s potentially big trouble in a nation where oil exports amount to $73 billion annually and the industry employs more than 550,000 workers. It’s also a bad omen for nations, notably China, that have invested billions in Canadian oil projects with expectations that they will one day be able to buy vast quantities of heavy Canadian crude.
In Vancouver, with a metro-area population of 2.5 million, the evergreen-rimmed, blue sprawl of English Bay laps up to the city center and is already a port for supertankers taking crude from an existing pipeline known as the Trans Mountain conduit. Photographer: Adrian Brown/Bloomberg News.
To do that means not just pumping it from the vast tar sands – thought to hold as many as 170 billion barrels — lying mainly to the east in the neighboring province of Alberta. It also means building pipelines to carry that heavy oil, known as bitumen, west to the coast. From there, fleets of supertankers will be needed to ship it across the Pacific to Asian markets that desperately want cheap oil.
Two such projects, representing about C$11.4 billion ($11.1 billion) in investments, are on the drawing boards. British Columbia, with its mountainous forests, national parks and salmon streams standing between the crude and the sea, wants no part of those pipelines — nor does it want its scenic bays to be turned into supertanker terminals.
In Vancouver, with a metro-area population of 2.5 million, the evergreen-rimmed, blue sprawl of English Bay laps up to the city center and is already a port for supertankers taking crude from an existing pipeline known as the Trans Mountain conduit. Sean Austin offered an opinion sounded often there — that enough is enough. “English Bay shouldn’t become a parking lot for supertankers,” Austin, a 41-year-old construction worker, said in an interview as the sun set over a seawall behind him.
Chinese Caught Out?
An end to the pipeline projects would be devastating news to a number of Chinese companies including Sinopec (386) and Cnooc Ltd. (883) Collectively, they have invested $36.3 billion in Canadian oil and gas assets over the past two years — the largest foreign investment inCanada’s petroleum industry.
“The expectation for Chinese investors from the very beginning was that Canadian oil would physically be delivered to China,” Wenran Jiang, an adviser to the Alberta government on Asian investment, said in an interview. “Chinese companies are heavily invested in the oil sands and they want to see these pipelines built.”
Austin’s view is backed up by a recent opinion poll that shows 60 percent of British Columbia voters fear continued oil and gas development will ruin their green paradise. The two projects drawing their ire are Enbridge Inc. (ENB)’s Northern Gateway pipeline and the proposed expansion of Kinder Morgan Energy Partners LP (KMP)’s Trans Mountain conduit.
Kinder Morgan Campaign
Kinder Morgan has been conducting a “grassroots” campaign to meet with British Columbians that would be affected by its project, in what will amount to a two-year effort in advance of the company seeking regulatory approval in late 2013, Ian Anderson, president of Kinder Morgan’s Canadian unit, said yesterday in Calgary.
There is “value-based opposition and opinion-based opposition, and where we have our work ahead of us is to understand where that opinion lacks information, lacks clarity, and informing that,” Anderson said in an interview yesterday.
Northern Gateway would cut a line across the middle of the province through a national park and over the Rockies and Coast Mountains, an area sparsely inhabited by aboriginal groups that say they don’t like pipelines. Kinder Morgan wants to more than double capacity on the Trans Mountain conduit, in operation for half a century, to 890,000 barrels a day to bring more oil through Vancouver to the city’s port.
Without these and other such projects, “Canada’s oil industry is facing a serious challenge to its long-term growth,” Craig Alexander, chief economist at Toronto-Dominion Bank, said in an interview.
While fights over TransCanada Corp. (TRP)’s Keystone XL pipeline, designed to transport Canadian tar-sands oil to U.S. refineries, have gotten most of the press, this long-simmering and escalating resentment of the province becoming a tar-sands conduit may in the end prove more damaging.
British Columbia voters on May 14 went through provincial elections in which the opposing parties fought hotly over a laundry list of social and economic issues. Yet the parties agreed vociferously on one thing: British Columbia will not sacrifice its environment for economic growth.
The national ruling Conservative Party of Prime Minister Stephen Harper favors oil and gas development and has the power to outright veto a pipeline project, following hearings by the national energy regulator. In January 2012, as pipeline regulatory hearings were about to begin, Harper’s government seemed steadfast in its support of the Northern Gateway project with Joe Oliver, Harper’s natural resources minister, accusing opponents of attempting to “hijack” the nation’s regulatory process in an effort to block energy exports.
As pipeline opposition mounted across the nation, however, Oliver in a speech last October said such projects shouldn’t proceed unless they are “safe and responsible.”
“We are committed to building a strong economy and protecting the environment,” said Todd Nogier, an Enbridge spokesman. “There is support for the project. And we are committed to increasing support.”
Even if the federal government gives the green light, British Columbia and its green groups have weapons to fight the projects beyond the court of public opinion.
Litigation, potentially long and costly, is already a reality. Environmental groups led by Ecojusticefiled suit in September to stop the pipeline projects, contending that the federal government hasn’t performed adequate environmental impact statements on the threat to imperiled species.
One British Columbia native group, the Saik’uz First Nation, has also threatened legal action should Enbridge win a green light from the federal regulator. The company has been threatened with civil disobedience and legal action that will go on “for years,” said John Ridsdale, a hereditary chief of the Wet’suwet’en nation.
“The big concern is the tanker traffic on the coast,” according to Andrew Weaver, a University of Victoria climate scientist and the first Green Party member to win a seat in the provincial legislature. “That issue won’t go away.”
Oil Price Reaction
The uncertainty over the fate of these pipelines is beginning show up in the oil price, with Canada’s biggest export being discounted as land-locked supplies build up.
The price of Canadian heavy has fallen 17 percent from last year’s high of $90.50. The discount to the U.S. price is costing the Canadian economy C$27 billion a year in lost profits and taxes and deprives markets of the world’s cheapest crude, according to the Alberta Finance Minister Doug Horner.
A majority of British Columbians don’t care. The same poll by Forum Research in December that found 60 percent of voters opposed oil and gas development also found only 37 percent of voters in favor.
Of course, Vancouver is known as “Lotus Land” in the rest of Canada. It’s also home to yoga-gear maker Lululemon Athletica Inc. (LULU), a mayor who started an organic juice company called Happy Planet and a green movement every bit as vociferous as California’s. So even as British Columbia’s economy has traditionally been reliant on forestry and mining, the times and attitudes are changing.
“People have a right to enjoy this inlet, this very small inlet, without having to look at oil tankers,” said Austin. “You have this wonderful sea walk. If the pipeline goes through and you have more tankers, what’s the use of having a sea walk?”
- Crude Landlocked as Canadians Join U.S. to Halt Pipelines (bloomberg.com)
- Drumbeat: May 24, 2013 (fuelfix.com)
- Crude landlocked as Canadians join U.S. to halt pipelines (fuelfix.com)
- Keystone Lobby Works on Democrats to Win Obama: Corporate … – Bloomberg (bloomberg.com)
- Oil pipelines to drive Canadian economy like 1800s railway track (business.financialpost.com)
- The Keystone XL debate is not an equal contest (philebersole.wordpress.com)
- U.S. publishes batch of Keystone XL comments (upi.com)
- Anatomy of an oil spill (globalnews.ca)
- Enbridge to meet re-elected B.C. Liberals on Northern Gateway (business.financialpost.com)
- Oil Pipelines to Drive Canadian Economy Like 1880s Railroads (bloomberg.com)
Oil Backed Up, Iranians Put It on Idled Ships
Published: July 4, 2012
BANDAR ABBAS, Iran — The hulking tanker Neptune was floating aimlessly this week in the warm waters of the Persian Gulf, a fresh coat of black paint barely concealing its true identity as an Iranian ship loaded with hundreds of thousands of barrels of oil that no one is willing to buy.
A closer look at the “Neptune,” an oil tanker afloat in the Persian Gulf last week, revealed that it was really the Iran Astaneh.
The New York Times
An estimated 65 Iranian tankers are being used to store oil.
The ship’s real name was Iran Astaneh, and it was part of a fleet of about 65 Iranian tankers serving as floating storage facilities for Iranian oil, each one given a nautical makeover to conceal its origin and make a buyer easier to find. The Neptune had been floating there for a month, and local fishermen said there were two even larger tankers anchored nearby.
Iran, faced with increasingly stringent economic sanctions imposed by the international community to force it to abandon any ambitions to develop nuclear weapons, has been reluctant to reduce its oil production, fearing that doing so could damage its wells. But Iran has insufficient space to store the crude it cannot sell. So while it furiously works to build storage capacity on shore, it has turned to mothballing at sea.
“We have never seen so many just waiting around,” said Rostam, a fisherman and smuggler who regularly works these waters.
After years of defiance and insistence that sanctions were barely being felt at home, Iranians are acknowledging the latest round with growing alarm. President Mahmoud Ahmadinejad said Tuesday that they were “the strongest yet.”
International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran’s sales should drop even more with the European embargo that went into effect on Sunday.
“They are getting squeezed,” said Sadad Al Husseini, former executive vice president for exploration and development of Saudi Aramco, the state oil company. “It’s too much trouble to buy Iranian oil. Why alienate the United States and Europe? And the rest of OPEC is not very happy with Iran either.”
On Wednesday, a Kenyan oil official told Reuters that the country was canceling an agreement to import up to 80,000 barrels of oil a day from Iran after Britain warned Kenya that it could run afoul of the sanctions. Meanwhile, South Korea said its imports of Iranian oil fell by nearly 50 percent in May, compared with April.
The drop in crude sales has hit Tehran with multiple challenges. Besides the financial impact, Iran has to figure out what to do with all the oil it continues to produce. Iran is pumping about 2.8 million barrels a day — already down about one million barrels daily since the start of the year. But it is exporting only an estimated 1.6 to 1.8 million barrels a day.
The unsold crude is being stored in what has been estimated to be two-thirds of the Iranian tanker fleet. Most of the ships are sailing in circles around the Persian Gulf as Iran tries to sell the mostly heavy crude at bargain-basement prices.
International oil experts estimate that Iran is now warehousing as much as 40 million barrels — roughly two weeks of production — on the tankers. An additional 10 million barrels are in storage on shore.
“We are now forced to sell our most valuable export product in secret,” said Nader Karimi Joni, an Iranian journalist specializing in oil. “Iran had a great reputation; now we have to falsify bills of lading, hide the oil’s origin and store oil on ships.”
The subterfuge operates on several levels, but here, on the waters off Bandar Abbas, it is all about the tanker, Neptune. Beneath the fresh black paint, the ship’s hulk bore the name in English and Persian of the tanker company, NITC.
The ship, one of Iran’s smallest, was built in 2000 in South Korea. It carried no flag, and its home port — Bushehr — had first been changed to Valletta, Malta, which had also been painted over. It now said Funafuti, the capital of the Pacific Ocean island nation of Tuvalu.
To conceal their positions — and perhaps to hide just how many loaded ships are at sea — Iran’s oil tankers also frequently turn off their GPS tracking devices, according to IHS Fairplay, a London-based ship tracking data company. It mapped out the last-known destinations of all NITC tankers, including the Iran Astaneh, and concluded that 21 were last seen in the Persian Gulf.
“I hear there are a lot more up north close to the oil terminals,” said Rostam, the smuggler, as he pulled his small craft up alongside the tanker.
Smugglers regularly zip across the Strait of Hormuz in small speedboats to the northern tip of Oman, Rostam and others said, picking up boxes of all kinds of black-market goods. Along the way, Rostam said, he sees the physical evidence of growing tension in the narrow waterway where one-fifth of the world’s oil must travel to get to market.
“We constantly run into United States Navy,” Rostam said. “They only stop us when our boat is filled with people. Not when we are shipping merchandise.”
Iran’s Revolutionary Guards navy is also present in the waters and has its headquarters in this port city, he said. The Iranian Navy operates mainly speedboats with missile launchers mounted on top, intending to swarm much larger American Navy ships with dozens of such boats in case of a confrontation.
Such conflict has happened before, and a defeat prompted Iran to change its navy’s military doctrine. During a one-day conflict in these waters in 1988 between Iran and the United States, one Iranian frigate was sunk, while Iranian forces claimed to have brought down an American helicopter. Some months later, an American Navy ship shot down an Iranian civilian airliner, killing 290 people, an event that Iran commemorated on Monday. The country maintains the plane was deliberately shot down, while the United States says it was an accident.
The prospect of a confrontation now could grow as the pressure builds on Iran while the sanctions, and dropping oil prices, cut deeper into Tehran’s financial lifeline.
Oil prices have fallen by nearly 10 percent since the beginning of the year — and roughly 20 percent from their peak in March — because of weakening demand from Europe, the United States and parts of the developing world, as well as increased production from Saudi Arabia, Iraq and Libya. Oil experts estimate that Iran’s oil export revenues are down about 35 percent compared with the beginning of the year.
Increasingly, Iran’s officials are warning its citizens to prepare for tough times ahead. On Monday, Ali Akbar Salehi, Iran’s foreign minister, made comparisons to the eight-year war between Iran and Iraq when he discussed with reporters the mounting pressures on Iran.
Iran’s vice president, Mohammad-Reza Rahimi, speaking during a religious conference on Sunday, said his country would never be stopped, and he asked for people’s support, state television reported. “Today, we are facing the heaviest of sanctions, and we ask people to help officials in this battle,” he said.
Aboard the Neptune, the crew knew what that meant: killing more time baby-sitting for crude at sea. On Sunday, members of the crew trudged out beneath a blazing sun and hauled up the anchor. They knew they were not going anywhere, but they took the opportunity to clean off the rust. Then they shouted to passengers in a skiff below, trying to make a joke.
“Wait five minutes,” a sailor said. “When we drop anchor again, you’ll get great pictures.”
- Oil Embargo Leads Iran to Disguise Tankers (nytimes.com)
- Oil backed up, Iranians put it on idled ships (ndtv.com)
- Stuck with oil it can’t sell, Iran sends ships in circles (nytimes.com)
- Iran tests missiles, renews Hormuz closure threat as EU oil embargo kicks in – CBS News (cbsnews.com)
- Iran Drafts Bill to Block Straits of Hormuz Following Embargo (gcaptain.com)
- EU oil embargo on Iran comes into effect (thehimalayantimes.com)
- Iran Threatens to Block Tankers in Response to Oil Import Embargo (newsworldwide.wordpress.com)
- Iran drafts bill to block Hormuz for Gulf oil tankers | Reuters (warsclerotic.wordpress.com)
- U.S. Adds Forces in Persian Gulf, a Signal to Iran – NYTimes.com (warsclerotic.wordpress.com)
- Iran Can Limit Tankers Access to Strait of Hormuz, Kayhan Says – Bloomberg (bloomberg.com)