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Tough competition for Alaska crude
14 of the 20 tankers at the Los Angeles and Long Beach ports are anchored indefinitely at the gateway to ANS oil’s largest market Kay Cashman Petroleum News
The recent softness of Alaska North Slope crude prices is indicative of more competition in the U.S. West Coast market where most Alaska oil is sold, including competition from Saudi Arabia, combined with falling demand due to the coronavirus pandemic, which has stifled worldwide economic activity.
There is no better illustration of the oil market glut than the oil tankers anchored along the southern California coast off Los Angeles and Long Beach, which has turned into floating storage for as much as 20 million barrels of crude, according to an April 27 report by Business Insider.
Of the 20 tankers, 14 are expected to remain for an indefinite or extended period and six are supposed to unload and move in the next five days. The New York Times reported that the largest tankers are commanding a price of as much as $200,000 per day.
One of the 20 tankers anchored at Los Angeles and Long Beach, the Polar Discovery, came from Valdez, the terminus of the trans-Alaska pipeline system that carries North Slope crude 800 miles south to be loaded onto tankers. The Polar Discovery anchored April 23 and is due to shift to Berth T-121 at Long Beach to unload on April 29, departing for Valdez April 30.
The Washington is scheduled to arrive from Valdez May 1 and will anchor awaiting berth.
The Polar Endeavor will also arrive from Valdez on May 1 and is going directly to Berth T-121 at Long Beach for unloading.
The U.S. Coast Guard is monitoring the increasing number of large vessels around the two California ports.
More than half full “As of this morning, there were 28 ships at anchor. There are 48 anchorages in total at the ports of Los Angeles and Long Beach, so 20 anchorages remain available for more ships,” Captain J. Kip Louttit told Petroleum News April 28.
Louttit is the executive director of the Marine Exchange of Southern California, an arm of the U.S. Coast Guard in charge of vessel traffic service.
There are also five cruise ships at anchor.
There’s plenty of space, he says. And if they ever did run out of anchorages, they have pre-designated “drift boxes” in the ocean where they can ask vessels captains to go to drift within 1 mile of each other.
That would keep all the ships organized and safe, Louttit says.
There is also currently one bulk carrier at anchor, which is scheduled to move in the next five days. (A bulk carrier is a merchant ship specially designed to transport unpackaged bulk cargo, such as grain, coal, ore, steel coils and cement.)
There are also two vehicle carriers, Louttit says, one of which is “scheduled to remain for an indefinite or extended period of time” and one is supposed to move in the next five days.
In term of what’s expected he says:
* Two tankers and one tug/barge expected today (April 28) but all three are going to the berth to discharge.
* One tanker and one tug/barge April 29 going to the berth to discharge.
* One tug/barge going to the berth April 30 to discharge.
* On May 1, one tanker is arriving to go to the berth to discharge but a second one will join the tankers at anchor for an “indefinite or undetermined length of time” (presumably the Washington, although that was not confirmed by Louttit).
All safely anchored In terms of safety, “the anchorages are all out of the way and not in the shipping lanes,” Louttit says. “A good analogy is that the ships are in the maritime equivalent of a big parking lot with designated parking places. We place them carefully based on their length, draft, next port, purpose of stay, length of stay, and other factors. Then we, the Coast Guard, and others monitor them while at anchor to ensure they are safe.”
The Los Angeles and Long Beach ports had “as many as 36 container ships at anchor during the October 2014-May 2015 timeframe when there was a congestion of container ships, so the 28 out there today is triple the usual, but nothing we have not safely handled before,” Louttit says.
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