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Energy Boom Stimulating Oil & Gas Tanker Construction & Use

Tuesday, June 10, 2014 6:44

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Shipping operators and investors are pouring billions of dollars into building oceangoing crude-oil tankers because of the North American energy boom. New drilling and extraction technology has unlocked vast reservoirs of crude oil and natural gas in the U.S. and Canada.

The U.S. has recently said it is considering lifting a long-standing oil-export ban. Removing the ban would be controversial and likely years down the line. The American energy company Dominion hopes to begin an expansion worth billions of dollars at its Cove Point complex on Chesapeake Bay later this year.

The Hoegh LNG gas vessel Independence during her sea trial earlier this year.

The 1,300 ft ship is longer than the largest aircraft carrier. Associated Press

Many operators are also considering building new tankers. Orders for new very large crude carriers (VLCCs), jumped from just three in 2011 to 47 last year. So far, ship operators have ordered 18 in the first quarter of this year. Used tanker prices have risen by about 15%, after four years of falling prices.

The Liberian LNG tanker Al Hamra at a port in Yokohama,

southwest of Tokyo. Soon crude carriers will get even bigger. Associated Press

Apart from any boost from possible U.S. exports, low shipbuilding prices are driving demand. The global economic crisis sent ship orders plummeting, reducing the cost of building ships at underutilized yards. Now demand is coming back, and ship operators are hopping back into the market, trying to get in before prices rise significantly.

But prices are already moving up. High demand for VLCCs, in particular, has prompted shipyards to raise prices by more than 10% since the middle of 2013. A new VLCC, which can carry around two million barrels of oil, now costs in excess of $100 million.

The U.S. energy boom has already translated into booming oil-products refining capacity and exports. U.S. based firms in the Gulf of Mexico have nearly doubled exports since 2010, according to data from the Energy Information Administration. Accordingly, orders for new product tankers—typically smaller than many crude carriers—jumped from 71 ships in 2011 to 188 vessels in 2013. (WSJ, 6/10/2014)

Source: http://cenvironment.blogspot.com/2014/06/energy-boom-stimulating-oil-gas-tanker.html

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