Montreal Could Become an Oil Export Hub

By Esa Ramasamy
Thursday, July 31, 2014

Montreal has emerged as an export base for Western Canadian heavy sour crudes as prospects to construct new pipelines to the British Columbia coast, Eastern Canada and U.S. fade.

Suncor, owner and operator of the 137,000 b/d Montreal East refinery in Quebec, loaded 35,000 mt of Western Canadian Select (WCS) crude from Montreal East onboard the Panamax tanker Sparto Sunday, according to market sources. Sparto is bound for the Motiva Norco refinery in Louisiana. This is believed to be the first time Western Canadian crudes are being shipped from Montreal into the U.S. Gulf Coast.

Suncor, in addition to its tankage at its Montreal East refinery, has leased tankage at Kildair’s Sorel-Tracy terminal in eastern Montreal. Sources say Suncor currently is railing in Western Canadian crudes into these two terminals.

“Suncor, which has time chartered Panamax tankers and leased additional storage at the Sorel terminal, will export or use these crudes at its Montreal refinery pending its economics,” said French-Canadian shipping and commodity trading specialist Simon Jacques Monday. Jacques is based in Saint John, New Brunswick. “If Suncor can refine these crudes, then it will do so. If not, it will seek an export market.” But Jacques noted also that Montreal is not a perfect export location. “It has an inherent disadvantage that it has a shallow draft.”

Despite that, according to Jacques, “[the developments at Montreal all makes sense as Enbridge will begin transporting 300,000 b/d of Western Canadian heavy sour crudes once its Line 9B, from Montreal to Westover, Ontario is reversed in the fourth quarter.”

Enbridge had earlier said in its regulatory filing that it expects to being linefill on Line 9B in October. “Completion of Line 9B’s reversal is expected by year end,” spokesman Graham White said in an email Monday.

Once Line 9 begins to supply Western Canadian heavy sour crudes to Montreal, Valero will also begin shipping Canadian heavy sour crudes from Montreal up to its 265,000 b/d Jean Gaulin refinery in Quebec City. Earlier this year, Valero teamed up with Groupe Desgagnés, a Quebec shipping company, to transport Canadian heavy sour crudes from Montreal to Quebec City on Panamax tankers.

Valero has said on record that its Jean Gaulin refinery would run a 100% on North American crudes by the end of this year.

Some players questioned the logic of railing in Western Canadian crudes to Montreal and then sailing it to the U.S. Gulf Coast. “Why don’t you just rail south?,” asked one trader. Separately, a source with a refiner said the Montreal to U.S. Gulf Coast approach via tanker “is only applicable to Gulf Coast refiners without the ability to receive and discharge crudes from rail cars,” said one U.S. refiner. “Refiners prefer to receive crudes directly from rail cars or from pipeline into tankers rather than molecules from pipeline stored in a tank.”

Sources said crudes on rail cars have about 5% or lower diluent than oil moved on pipelines. On top of that, shipments in the summer have between 10-15% diluent and in the winter months as high as 33% diluent. “The higher diluent volume will have a [larger] discount to crudes with lower levels of diluent, and moreover refiners prefer crudes will lesser amounts of diluent,” said the U.S. refiner.

Platts earlier this week assessed WCS ex-Hardisty at WTI calendar month average minus $23.00/b. Traders put rail charges from Hardisty to Montreal at around $10/b with freight from Montreal to Louisiana at $3.49/b. In the Gulf Coast, Canadian heavy sour crudes are talked at a parity or a slight premium to WCS at Cushing, which was assessed at WTI calendar month average minus $6.95/b. So the economic incentive to move WCS to the Gulf Coast is clear.
 

Maritime Reporter November 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

INTERTANKO Launches ECA Bunker Surcharge Clauses

INTERTANKO’s documentary committee has launched bunker surcharge clauses for Emission Control Areas (ECA).   Rising bunker prices due to rising oil prices and

DSME Returns for More Dual-Fuel Engines

MAN Diesel & Turbo received an order for four MAN B&W 5G70ME-GI engines in connection with Daewoo Shipbuilding & Marine Engineering Co.,Ltd. (DSME) agreeing a deal

USCG Addresses Future of Marine Fuels

The future of marine fuels from the Liquefied Gas Carrier National Center of Expertise   The Pacific Merchant Shipping Association hosted The Future of Marine

Ports

Maritime Reporter @ 75: The Daily Cartoon

Maritime Reporter & Engineering News was founded by John J. O'Malley (1905-1980) in 1939, and today ranks as the world's largest audited trade publication in the world serving the maritime industry,

Los Angeles Container Volumes Drop

November container volumes down 3 percent at Port of Los Angeles; year-to-date volumes up 6.5 percent   Overall containerized cargo volumes in November 2014 have

Transpacific Box Shippers Plan Freight Rate Rise

A container shipping organisation urged companies on Wednesday to raise Asia-U.S. freight rates by at least $600 per 40-foot container (FEU) from Jan. 15, corresponding to an increase of 26.

Navy

NASSCO Opens New Facility for Naval Repair

General Dynamics NASSCO opened a new location yesterday in Bremerton, Wash. to support the company’s recently-awarded contract to repair and maintain U.S. Navy

GE Gas Turbine Powers Australia’s Largest Warship

GE Marine’s LM2500 aeroderivative marine gas turbine now powers the Royal Australian Navy’s (RAN) recently commissioned HMAS Canberra Landing Helicopter Dock (LHD) ship,

Philippines to Buy Naval Assets, China Sea Dispute Simmers

The Philippines aims to buy two frigates, two helicopters and three gunboats for deployment in the South China Sea where a territorial dispute with China has lent

Energy

Rig Moves: Mobilized for Performance

The operation of an oil field involves moving rigs or jackups in a maneuver referred to as a rig move. These complex operations require experience and the coordination of all stakeholders.

FPSO Trio Receives Side Shell Protection

SPS Overlay has yet again been used for side impact protection on three FPSOs for a major player in the offshore industry. The work was carried out at Enseada do Paraguaçu S.

INTERTANKO Launches ECA Bunker Surcharge Clauses

INTERTANKO’s documentary committee has launched bunker surcharge clauses for Emission Control Areas (ECA).   Rising bunker prices due to rising oil prices and

News

Damen Responds to Evolving Fishing Practices

Maaskant Shipyards Stellendam meets fishing sector’s growing needs by performing electric pulse fishing conversions   As European fishing policies evolve, so fishing techniques advance.

Maaskant Shipyards Earns ISO 9001:2008 Certificate

Maaskant Shipyards (Stellendam), part of Damen Shipyards Group, has received certification from Bureau Veritas for aligning its quality and management systems with

Duffy Named President of Carnival Cruise Line

Christine Duffy has been named president of Carnival Cruise Line, Carnival Corporation & plc. announced today.   Duffy, currently president and CEO of Cruise Lines International Association (CLIA),

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Pod Propulsion Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1471 sec (7 req/sec)