Thursday, March 8th, 2018

Supertankers Gearing Up to Bolster US Crude Exports

Supertankers for US Crude Oil ExportsWith oil production hitting record highs, supertankers may represent a solution to the accelerating US export needs. In February of 2018, the first supertanker capable of carrying 2-million barrels of crude loaded up in Louisiana. The ship, dubbed Shaden, is a charter of Shell Oil, and may well launch a whole new era for US crude exports.

More Production Means More Need to Ship Globally

Oil production in the US has reached outputs never before seen. Most recently, production surged past the previous 1970 record as output went well beyond 10-million barrels/day. Evidence points towards daily production growing even greater over the next few years, with crude production expected to reach an average of 10.6 million b/d in 2018. The EIA projects that US crude production will reach all-time highs again in 2019 and is expected to average 11.2 million b/d.

The increased output puts US production on par with Saudi Arabia, and far beyond all the other OPEC countries. Russia still holds the production crown, but prognosticators can see a time when the US overtakes them as well.

Increased production, coupled with less domestic demand, means the US will need more avenues of exporting the excess. Fewer bans on exports and greater international demand for US crude and other oil products is the current state of affairs. This became apparent to many when the UAE, an OPEC country, purchased 700,000 barrels of US light crude.

More Global Opportunities Means More International Exports

US Crude Oil Exports SkyrocketingChartering and making use of supertankers to ship crude and other oil products can open up a new world for the US energy industry. Tankers aren’t anything new. Smaller vessels often play a role in logistics chains. Ship to ship transfers is a method often used where smaller tankers would have to sail out to larger ones and transfer their crude oil cargo a bit at a time.

The Louisiana Offshore Oil Port is one of the only ports capable of hosting and loading a full VLCC in the United States. Most ports in the US are too shallow to load a supertanker to full capacity. The National Shipping Co. of Saudi Arabia-owned Shaden was the first supertanker fully loaded at a US port. Supertankers can drastically lower the costs of shipping and help to move more crude to foreign shores faster than ever before.

Many in the industry speculate the US can become the chief exporter of crude sooner than analysts originally thought. Shale oil has already created some contention with OPEC. Added capability to move crude and other oil products can only increase the ability of the United States to claim global market share over OPEC.

US Crude Oil Exports by Year 2011 Through 2017

More Exports Puts the US Closer to Global Energy Dominance

The Shaden will carry crude to Rizhao, a Chinese port. Reports say the ship carries crude from offshore production, rather than shale oil. Nevertheless, shale production is the big game changer.

The ability to move more crude on supertankers falls right in line with the increase in efficiency and outflow capacity shale producers are striving for. Altogether, it looks like the US really is closing in on becoming the top exporter of crude and oil products.