California Could Be the Default Destination for Trans Mountain Oil
There are approximately 48 crude oil tankers visiting Vancouver annually
When the Trans Mountain pipeline expands from 300,000 b/d to 890,000 b/d at full capacity, along with crude oil from Alberta to the B.C. coast it also will carry the hopes of many in the industry that Albertan heavy crude will finally earn an Asian market premium, having broken free of North American pricing. However, the biggest vessels that the oil terminal port of Burnaby, near Vancouver, can handle are Aframax carriers. These are not cost-competitive on the open seas against the Middle Eastern suppliers’ ULCCs and VLCCs.
So Albertan producers will have to absorb that transport cost or find another market, such as California.
In 2008, Somali pirates seized the Sirus Star, a Saudi ULCC supertanker with two million barrels of oil onboard—one-quarter of Saudi Arabia’s daily output. The hijacking moved the price of oil on world markets one U.S. dollar. The pirates later ransomed the tanker, crew and cargo for US$3 million.
Size Does Matter
Aframax (Average Freight Rate Assessment)
Aframax are medium-sized oil tankers—80,000 to 119,999 deadweight tonnage (DWT)—used for shipping oil short to medium distances. They are mainly used in regions of low crude production or those that lack ports large enough to accommodate larger oil tankers.
Very Large Crude Carrier (VLCC)
VLCCs range between 180,000 to 320,000 in DWT. They can use a variety of terminals and can also operate in ports with depth limitations. VLCCs are used extensively around the North Sea, the Mediterranean and West Africa.
Ultra Large Crude Carrier (ULCC)
ULCCs are the world’s largest shipping vessels—more than 320,000 DWT. They commonly take crude from the Middle East to Europe, Asia, and North America.