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

Ports

New Players in Singapore Markets in OW's Absence

The downfall of a leading marine fuel supplier that prompted sellers to tighten credit terms in Singapore is skewing the post-OW Bunker jostle for market share

PSA Chairman Receives Belgium Award

On 27 November 2014, PSA Group Chairman Fock Siew Wah was conferred the national distinction ‘Commander of the Order of the Crown’ from His Majesty King Philippe of Belgium for his merit,

Fednav Celebrates Anniversary Trio in Cleveland

Fednav Limited held a reception on board one of its vessels, the Federal Mayumi, at the Port of Cleveland yesterday to celebrate a trio of anniversaries: the 70th

Navy

NATO Unconcerned by Russian Warships in English Channel

A squadron of Russian warships entered the English Channel on Friday but a NATO official dismissed a Russian media report that they were there to conduct military exercises.

Japan Military Wants China "Crisis Management" Pact

Japan's highest-ranking military officer on Friday urged an early start to a "crisis management" mechanism with China amid conflicting claims to a group of tiny East China Sea islands.

NAVCENT Commander Recognizes Journey of Hope Sailors

Commander, U.S. Naval Forces Central Command, U.S. 5th Fleet, Combined Maritime Forces, Vice Adm. John. W. Miller, recognized the accomplishments of three special-needs sailors from the Kuwaiti ship,

Energy

EU Regs on Ship CO2 Reporting Complicates IMO Agreement

ICS Concerned that EU will Preempt IMO CO2 Negotiations.   The global trade association for shipowners – the International Chamber of Shipping (ICS) – is disappointed

Asia VLCC Rates Could Could Climb Even More

Owners see rates climb by nearly $22,000 per day; Rates could peak as more tonnage comes free. Rates for very large crude carriers (VLCCs) on key Asian routes

New Players in Singapore Markets in OW's Absence

The downfall of a leading marine fuel supplier that prompted sellers to tighten credit terms in Singapore is skewing the post-OW Bunker jostle for market share

News

EU Regs on Ship CO2 Reporting Complicates IMO Agreement

ICS Concerned that EU will Preempt IMO CO2 Negotiations.   The global trade association for shipowners – the International Chamber of Shipping (ICS) – is disappointed

World’s Largest Boxship is DNV GL classed

CSCL Globe, the world’s largest containership and the first of a series of five 19,100 TEU containerships ordered by China Shipping Container Lines (CSCL) in 2013,

New Players in Singapore Markets in OW's Absence

The downfall of a leading marine fuel supplier that prompted sellers to tighten credit terms in Singapore is skewing the post-OW Bunker jostle for market share

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Pipelines Salvage Ship Electronics Ship Repair Ship Simulators Winch
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: 0.1522 sec (7 req/sec)