Jones Act Tanker Chartered for Airline Refinery

Posted by Eric Haun
Friday, July 25, 2014

Delta Air Lines Inc's refining unit has chartered a U.S.-flagged oil tanker for the first time, allowing it to tap directly into cheap Texas shale oil as the company overhauls its supply strategy.

Monroe Energy LLC, the Delta subsidiary that runs the airline's 165,000 barrel per day (bpd) Trainer refinery, has time-chartered the 330,000-barrel MR Seabulk Arctic, a Jones Act vessel built in 1998, for two years beginning in August, according to sources familiar with the deal. A Delta spokesman confirmed the charter but provided no further details.

It has an option to switch to a newly build ship in 2016 for an additional three years. Seabulk Tankers Inc, an indirect, wholly-owned subsidiary of SEACOR Holdings Inc that owns the Seabulk Arctic, has three tankers on order from General Dynamics's NASSCO shipyard in San Diego, the first of which will be delivered in the fourth quarter of 2016.

The ship was previously chartered to leading U.S. refiner Valero Energy Corp, which sources say has moved to reduce its exposure to the Jones Act shipping market, a once-quiet niche that has surged in recent years on growing demand to ship Texas shale crude to East Coast refiners.

Monroe is paying upward of $80,000 per day for the Seabulk Arctic, a comparatively cheap rate that results from its age, higher fuel consumption and the longer duration of the contract. In contrast. Exxon Mobile Corp agreed to a record $120,000 a day charter in May.

After dropping the Seabulk Arctic charter, Valero will no longer have any domestic tonnage, sources said. A spokesman for Valero did not immediately reply to requests for comment.

TRADING OVERHAUL?

Ships moving between U.S. ports are required to be Jones Act compliant - U.S.-flagged, U.S.-built, and U.S.-crewed - making them about three times more expensive than international vessels.

Still, spot rates have doubled in three years as gushing shale wells in Texas depress Gulf Coast light crude prices, making the two-week journey to the East Coast more profitable than imports from the North Sea or Nigeria.

The Seabulk Arctic charter is the latest indication that Monroe is taking a new tack in its trading operations two years after Delta bought the Trainer plant, southwest of Philadelphia. At that time Delta sealed deals with BP and Phillips 66 to supply crude to the refinery and swap refined fuels for jet fuel.

On Thursday, however, Delta said in its quarterly filing that it had terminated the fuel-swap agreement with BP early, effective July 1, and replaced the oil major with another counterparty. It did not name the new party.

The SEC filing also made no mention of a three-year agreement with BP to supply Trainer with crude oil.

However, on Monday Monroe said that privately held midstream company Bridger LLC would supply 65,000 bpd of North Dakota Bakken crude to the Trainer refinery, largely by rail. (FACTBOX rail projects ).

While Monroe now has its own tanker for deliveries, this will not be the first time it is receiving Texas oil by ship.

Jones Act tankers Golden State and Florida have each made at least four trips from the Gulf Coast to the Trainer docks so far this year, according to Reuters shipping data. It was not clear whether all of those cargoes were destined for the Trainer refinery.

(Reporting by Anna Louie Sussman; Editing by Steve Orlofsky)

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

Tanker Trends

Weak Oil Threatens US Export of LNG

Plunging global oil prices may turn hopes for cheap liquefied natural gas supplies from the United States into a costly disappointment for Asian buyers who have

Singapore’s MPA Discuss LNG Bunkering

The Maritime and Port Authority of Singapore (MPA), Antwerp Port Authority, Port of Rotterdam and Port of Zeebrugge participated in a Liquefied Natural Gas (LNG)

New Standard for LNG Cargo Containment Systems

Wilhelmsen Technical Solutions (WTS) said it has successfully completing the gas trial for the first LNG carrier built to a Boil Off Rate (BOR) of 0.08% per day.

Energy

Asia-Pacific Solar Collaboration Conference

The Australian Photovoltaic Institute is holding the inaugural Asia-Pacific Solar Research Conference at the University of New South Wales in Sydney from 8-10 December 2014.

Pentair Reports 3Q 2014 Sales of $1.8 bi

Pentair plc today announced third quarter 2014 sales of $1.8 billion. Sales were up 3 percent compared to sales for the same period last year. Third quarter 2014

FortisBC Starts Expansion of Tilbury LNG Facility

FortisBC – a subsidiary of Fortis Inc. has officially started construction of its $400 million Tilbury LNG Facility expansion project today. The company is adding 1.

News

AMSA Rescues 2 East of Darwin After Boat Sinks

The Australian Maritime Safety Authority (AMSA) coordinated the rescue of two men early this morning East of Darwin. About 4.30am AEDT this morning, AMSA detected

Georgia Delegation visit Naval Academy "NYVaptsarov"

From 15 to 17oktomvri 2014. Naval Academy "N. Vaptzarov "hosted a delegation from Georgia led by prof. Sharabidze Irakli - Rector of the State Maritime Academy, city.

Asia-Pacific Solar Collaboration Conference

The Australian Photovoltaic Institute is holding the inaugural Asia-Pacific Solar Research Conference at the University of New South Wales in Sydney from 8-10 December 2014.

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Offshore Oil Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction
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: 0.0995 sec (10 req/sec)