Going Deep

21 June 2024:Deepwater port development will help VLCC demand Over the last decade, the U.S. has developed into the largest crude oil producer in the world. This is largely due to the shale oil developments in Texas and some other states. As most shale oil is very light crude and most of the U.S. Gulf refineries were designed for the heavier grades prevalent in the Caribbean and Gulf of Mexico, the U.S. exports significant volumes of crude oil and condensates, while also importing heavier grades. Additionally, U.S. refineries on the West coast and East coast continue to import crude oil as they often don’t have easy pipeline access to these shale crudes. Due to this rapid oil production growth, the U.S. Gulf export infrastructure has had trouble to keep up with the rapid export growth, especially for shipments using the most economical tankers for long haul trades, Very Large Crude Carriers (VLCC). As the U.S. Gulf coast is relatively shallow, no normal ports can accommodate fully laden VLCCs. The only exception is the Louisiana Offshore Oil Port (LOOP), which was designed as an offshore oil import terminal and upgraded in 2017 to also allow exports. However, the port is far removed from the most prolific shale oil production regions in the Permian and additionally, the use as export terminal is complicated by the pipeline configuration which requires the emptying of the line when switching from imports to exports.