Western Canada Select price continues to sink

Western Canada Select (or Oilsands heavy crude) has now dropped to $38.29 a barrel, while West Texas Intermediate hovers near $70.  That is the greatest spread seen in a very long time, at least since 2013.  The culprit?  Insufficient takeaway capacity. 

And it does not look like it is going to get any better any time soon for the oilsands producers.  There is no spare pipeline capacity to the Pacific, and the Kinder Morgan twinning line is not about to be  built any time soon, given the resistance of the "First Nations" groups in British Columbia. So that leaves US Gulf Coast refiners as customers, and they have enough, plus also no pipe to bring in more.  The Canadians are reduced to shipping by rail tankcar, which has now climbed to an astounding 198,788 bbl/day  [for May, the last month for which stats are available].  As a worsening matter, the Canadians' largest customer, the BP refinery in Whiting, Indiana, is going to go off-line later this year for maintenance; that refinery consumes some 414,000 bbl/day. 

So there are all these Canadian oilsands operators out there pumping out the product, and no place to put the stuff.  I can see that the short-term result will be price collapse.  Longer-term, Canada may well end up building their own refineries to handle their own crude, rather than purchasing both American and Middle-East crude for their Eastern requirements. Technically, Canada can do that, but whether or not the Trudeau government is prepared to commit the capital sums needed is another story.  I think that  long-term, that is where Canada is headed. But in the meantime, the Canadian producers will feel the pain. 

  • Like 1
  • Upvote 2

Share this post


Link to post
Share on other sites

As someone with mineral rights in Canada it is rather painful to see how the Canadian government has handled all these pipeline woes. Trans mountain should be complete by now. We all knew this day would come. Oil has rallied, producers have ramped up and we're not getting even close to what we should for what I would say is the most valuable national resource.

Not only that, but due to the last down turn transportation via rail has been made harder or oil companies because the rail wants them to enter into long term contracts since the last time rail got burned with companies pulling out as soon as prices declined. However, with the current volatility of WCS it is hard for some companies to be willing to take on that risk since rail is much more expensive.

On top of a lack of pipeline, and rail, refineries in the states are now shutting down for maintenance, I don't recall the name but one is scheduled in the near future that takes roughly 500,000 bpd of Canadian crude if I recall correctly.

I can't wait for the pipelines to be built. Hopefully Line 3 and XL will be done by the end of 2019, and Transmountain by 2020 (although) 2021 is looking more and more likely...

  • Like 2

Share this post


Link to post
Share on other sites

5 hours ago, Jan van Eck said:

Western Canada Select (or Oilsands heavy crude) has now dropped to $38.29 a barrel, while West Texas Intermediate hovers near $70.  That is the greatest spread seen in a very long time, at least since 2013.  The culprit?  Insufficient takeaway capacity. 

And it does not look like it is going to get any better any time soon for the oilsands producers.  There is no spare pipeline capacity to the Pacific, and the Kinder Morgan twinning line is not about to be  built any time soon, given the resistance of the "First Nations" groups in British Columbia. So that leaves US Gulf Coast refiners as customers, and they have enough, plus also no pipe to bring in more.  The Canadians are reduced to shipping by rail tankcar, which has now climbed to an astounding 198,788 bbl/day  [for May, the last month for which stats are available].  As a worsening matter, the Canadians' largest customer, the BP refinery in Whiting, Indiana, is going to go off-line later this year for maintenance; that refinery consumes some 414,000 bbl/day. 

So there are all these Canadian oilsands operators out there pumping out the product, and no place to put the stuff.  I can see that the short-term result will be price collapse.  Longer-term, Canada may well end up building their own refineries to handle their own crude, rather than purchasing both American and Middle-East crude for their Eastern requirements. Technically, Canada can do that, but whether or not the Trudeau government is prepared to commit the capital sums needed is another story.  I think that  long-term, that is where Canada is headed. But in the meantime, the Canadian producers will feel the pain. 

I simply am not convinced about your points, Jan, mainly because there is no mention of the loonies.  :)

  • Like 1

Share this post


Link to post
Share on other sites

1 minute ago, Dan Warnick said:

I simply am not convinced about your points, Jan, mainly because there is no mention of the loonies.  :)

Heh, heh, ya got me there!

  • Like 1

Share this post


Link to post
Share on other sites

I may have located the problem:

 

H02_Canada_Pipeline_Protest.jpg

  • Like 2
  • Upvote 1

Share this post


Link to post
Share on other sites

Tom, any idea what city that was in?

Share this post


Link to post
Share on other sites

11 minutes ago, Jan van Eck said:

Tom, any idea what city that was in?

Canada: 99 Detained at Protest Demanding End to Tar Sands Pipelines

In Canada, 99 people were detained by police Monday at a demonstration on Parliament Hill in Ottawa, demanding Prime Minister Justin Trudeau reject the expansion of the Kinder Morgan Trans Mountain pipeline, as well as all new tar sands pipelines and infrastructure. Among those arrested was Clayton Thomas-Muller, a climate activist from the Cree Nation in northern Manitoba.

  • Like 1

Share this post


Link to post
Share on other sites

whoever finance likes of 350.org is doing damn fine job - money well spent and Canadian crude trades at insane discount. Sad reality is US needs it for blending and it probably deserves a premium price.

  • Like 1

Share this post


Link to post
Share on other sites

11 hours ago, Jullien Bagneris said:

*pukes in mouth*

/ update, the LinkedIn post was apparently deleted.  And it looks like "Nigel CHEESE" who bills himself as "gentleman and scientist" was banned or deleted from LinkedIn - I can't find the loon anymore.  All of his LinkedIn Pulse articles found via Google seem to be 404 as well.

 

Kinda related, I just couldn't help myself, I had to gently poke an anti oil & gas loon over on LinkedIn, for amusement.

If Nigel the loon (who claims to have an IQ of 207) tries to make a public example of me, I'll be sure to update here for amusement... scroll down after the loon's ranting to see my comment - I'm defending Richard, the Oil & Gas guy who this loon was trying to publicly humiliate.

https://www.linkedin.com/feed/update/urn:li:activity:6431374638525227008

  • Like 1

Share this post


Link to post
Share on other sites

7 hours ago, Jan van Eck said:

Western Canada Select (or Oilsands heavy crude) has now dropped to $38.29 a barrel, while West Texas Intermediate hovers near $70.  That is the greatest spread seen in a very long time, at least since 2013.  The culprit?  Insufficient takeaway capacity. 

And it does not look like it is going to get any better any time soon for the oilsands producers.  There is no spare pipeline capacity to the Pacific, and the Kinder Morgan twinning line is not about to be  built any time soon, given the resistance of the "First Nations" groups in British Columbia. So that leaves US Gulf Coast refiners as customers, and they have enough, plus also no pipe to bring in more.  The Canadians are reduced to shipping by rail tankcar, which has now climbed to an astounding 198,788 bbl/day  [for May, the last month for which stats are available].  As a worsening matter, the Canadians' largest customer, the BP refinery in Whiting, Indiana, is going to go off-line later this year for maintenance; that refinery consumes some 414,000 bbl/day. 

So there are all these Canadian oilsands operators out there pumping out the product, and no place to put the stuff.  I can see that the short-term result will be price collapse.  Longer-term, Canada may well end up building their own refineries to handle their own crude, rather than purchasing both American and Middle-East crude for their Eastern requirements. Technically, Canada can do that, but whether or not the Trudeau government is prepared to commit the capital sums needed is another story.  I think that  long-term, that is where Canada is headed. But in the meantime, the Canadian producers will feel the pain. 

I see it differently, Jan. My arithmetic says that Canadian oil is too costly to be produced and converted into gasoline and diesel fuel, and moved to the market to compete with other supply sources. If that is the case, the likely result is that Oil Sands production will decline significantly, not because of the inability to move it out of Canada, but because there will be no customer to purchase the high cost product. Canada's only hope is to find a creative and low cost strategy to remove the problem component, asphaltenes, from the production and then convert the heavy oil to a heavy marine fuel that meets the sulfur restriction. That might be competitive. Intensive processing to make small molecules out of big ones doesn't make economic sense.

  • Upvote 2

Share this post


Link to post
Share on other sites

46 minutes ago, DanilKa said:

whoever finance likes of 350.org is doing damn fine job - money well spent and Canadian crude trades at insane discount. Sad reality is US needs it for blending and it probably deserves a premium price.

The US does not need it (Canadian heavy oil) and cannot afford it if the Canadians charge a world-based price for it. Basrah Heavy or Arabian heavy will do a better job in US refineries at a much lower production cost.

  • Upvote 1

Share this post


Link to post
Share on other sites

7 hours ago, Jan van Eck said:

Western Canada Select (or Oilsands heavy crude) has now dropped to $38.29 a barrel, while West Texas Intermediate hovers near $70.  That is the greatest spread seen in a very long time, at least since 2013.  The culprit?  Insufficient takeaway capacity. 

And it does not look like it is going to get any better any time soon for the oilsands producers.  There is no spare pipeline capacity to the Pacific, and the Kinder Morgan twinning line is not about to be  built any time soon, given the resistance of the "First Nations" groups in British Columbia. So that leaves US Gulf Coast refiners as customers, and they have enough, plus also no pipe to bring in more.  The Canadians are reduced to shipping by rail tankcar, which has now climbed to an astounding 198,788 bbl/day  [for May, the last month for which stats are available].  As a worsening matter, the Canadians' largest customer, the BP refinery in Whiting, Indiana, is going to go off-line later this year for maintenance; that refinery consumes some 414,000 bbl/day. 

So there are all these Canadian oilsands operators out there pumping out the product, and no place to put the stuff.  I can see that the short-term result will be price collapse.  Longer-term, Canada may well end up building their own refineries to handle their own crude, rather than purchasing both American and Middle-East crude for their Eastern requirements. Technically, Canada can do that, but whether or not the Trudeau government is prepared to commit the capital sums needed is another story.  I think that  long-term, that is where Canada is headed. But in the meantime, the Canadian producers will feel the pain. 

You say  "Insufficient takeaway capacity", Jan. I think that that is not the reason. I predict that, when sufficient takeaway capacity is provided, the differential will still exist. The reason: Insufficient processing capacity -- globally. 

  • Like 2

Share this post


Link to post
Share on other sites

1 hour ago, William Edwards said:

You say  "Insufficient takeaway capacity", Jan. I think that that is not the reason. I predict that, when sufficient takeaway capacity is provided, the differential will still exist. The reason: Insufficient processing capacity -- globally. 

It really is nice to have you back, William.  Your depth provides good balance and perspective, and I'm sure Jan appreciates that as much as anyone.

  • Like 2
  • Upvote 2

Share this post


Link to post
Share on other sites

9 minutes ago, Dan Warnick said:

It really is nice to have you back, William.  Your depth provides good balance and perspective, and I'm sure Jan appreciates that as much as anyone.

^  agreed

  • Like 1

Share this post


Link to post
Share on other sites

(edited)

12 hours ago, William Edwards said:

I see it differently, Jan. My arithmetic says that Canadian oil is too costly to be produced and converted into gasoline and diesel fuel, and moved to the market to compete with other supply sources. If that is the case, the likely result is that Oil Sands production will decline significantly, not because of the inability to move it out of Canada, but because there will be no customer to purchase the high cost product. Canada's only hope is to find a creative and low cost strategy to remove the problem component, asphaltenes, from the production and then convert the heavy oil to a heavy marine fuel that meets the sulfur restriction. That might be competitive. Intensive processing to make small molecules out of big ones doesn't make economic sense.

Here's the thing, William; you are looking at this from a perspective of rationality.  And that is going to be inapplicable. Here's why.

There is this political component, in the case of Canada, the "national identity."  And as an integral part of the political component, you have Alberta and oil.  Now that Manitoba has slipped to being a "receiving Province," basically an impoverished, beggar Province, in the Ottawa Equalization Payments program, where the poor Provinces receive extra billions from the rich Provinces, there are only three Provinces that support the entire nation - British Columbia ["BC"], Alberta, and Saskatchewan.  The producer items that provide all that revenue are timber, mining, grains, - and oil.  

So you have this political situation where this oil has to be produced, and has to be taxed, both for national identity reasons and to generate revenue for the Equalization Payments scheme.  Previously, there was much less pressure on the resources of the West, as Ontario was this vast industrial powerhouse that produced extraordinary wealth.  One result of that massive wealth generation was that so many Canadians ended up living in Ontario, now I think about 40% or more of the total Canadian population.  Another result is that Toronto has become a "mega-city."  Except then along came the various hysterical components who wanted to do "green electricity" with the result that the entire Ontario electric grid system is wrecked. The unpleasant truth is that industry runs on cheap power.  Take away the cheap power and industry collapses. 

The hysterical, which includes the "greens" and the "Progressives" and various other vaguely self-identified "lefties" and doomsayers  ["If we don't have a carbon tax we are doomed!  If we don't stop using oil we are doomed!  If we don't go to wind power we are doomed!"] pushed the provincial government into these insane feed-in tariffs and the spawning of these vast PURPA plants of solar panels and, especially in Ontario, "wind farms" consisting of these industrial propellers mounted on poles, to the detriment of the stable nuclear plants, all of which led to totally insane electric pricing. That collapsed industry, some of which moved to the USA, some of which simply folded. Meanwhile you have all these now-unemployed people, the net result of all that is the Province runs on an annual deficit of some $16 billion and has an accumulated debt from deficit spending of some $323 Billion.  So Ottawa starts making those "equalization payments" from the kitty provided by Western Oil. 

Faced with this dynamic, there is simply no way, at least no political way, that Western Canada Select is not going to be pumped and sold. It has to be, because the money has to be found to support the intricate Equalization Payments that knits the country together. So if the stuff cannot be sold on the world market, as it is simply priced out relative to Basrah Heavy, then an artificial internal market will be created.  You will see Canada shutting down on its imports and substituting its oilsands crude for its domestic consumption.  That implies Ottawa participating in funding new refineries - and it will. It implies some form of tariff barrier, or even nationalization of the refineries in Montreal and Sarnia - and it will. I predict all of Canada will end up running on Canadian crude as feedstock, because the political dynamic will mandate it. 

It does not matter if it makes no sense.  Lots of things happen on the planet that make no sense.  Happens anyway. 

Edited by Jan van Eck
  • Like 3

Share this post


Link to post
Share on other sites

(edited)

3 hours ago, Jan van Eck said:

Here's the thing, William; you are looking at this from a perspective of rationality.  And that is going to be inapplicable. Here's why.

There is this political component, in the case of Canada, the "national identity."  And as an integral part of the political component, you have Alberta and oil.  Now that Manitoba has slipped to being a "receiving Province," basically an impoverished, beggar Province, in the Ottawa Equalization Payments program, where the poor Provinces receive extra billions from the rich Provinces, there are only three Provinces that support the entire nation - British Columbia ["BC"], Alberta, and Saskatchewan.  The producer items that provide all that revenue are timber, mining, grains, - and oil.  

So you have this political situation where this oil has to be produced, and has to be taxed, both for national identity reasons and to generate revenue for the Equalization Payments scheme.  Previously, there was much less pressure on the resources of the West, as Ontario was this vast industrial powerhouse that produced extraordinary wealth.  One result of that massive wealth generation was that so many Canadians ended up living in Ontario, now I think about 40% or more of the total Canadian population.  Another result is that Toronto has become a "mega-city."  Except then along came the various hysterical components who wanted to do "green electricity" with the result that the entire Ontario electric grid system is wrecked. The unpleasant truth is that industry runs on cheap power.  Take away the cheap power and industry collapses. 

The hysterical, which includes the "greens" and the "Progressives" and various other vaguely self-identified "lefties" and doomsayers  ["If we don't have a carbon tax we are doomed!  If we don't stop using oil we are doomed!  If we don't go to wind power we are doomed!"] pushed the provincial government into these insane feed-in tariffs and the spawning of these vast PURPA plants of solar panels and, especially in Ontario, "wind farms" consisting of these industrial propellers mounted on poles, to the detriment of the stable nuclear plants, all of which led to totally insane electric pricing. That collapsed industry, some of which moved to the USA, some of which simply folded. Meanwhile you have all these now-unemployed people, the net result of all that is the Province runs on an annual deficit of some $16 billion and has an accumulated debt from deficit spending of some $323 Billion.  So Ottawa starts making those "equalization payments" from the kitty provided by Western Oil. 

Faced with this dynamic, there is simply no way, at least no political way, that Western Canada Select is not going to be pumped and sold. It has to be, because the money has to be found to support the intricate Equalization Payments that knits the country together. So if the stuff cannot be sold on the world market, as it is simply priced out relative to Basrah Heavy, then an artificial internal market will be created.  You will see Canada shutting down on its imports and substituting its oilsands crude for its domestic consumption.  That implies Ottawa participating in funding new refineries - and it will. It implies some form of tariff barrier, or even nationalization of the refineries in Montreal and Sarnia - and it will. I predict all of Canada will end up running on Canadian crude as feedstock, because the political dynamic will mandate it. 

It does not matter if it makes no sense.  Lots on things happen on the planet that make no sense.  Happens anyway. 

Jan, let me begin by acknowledging that your political knowledge puts mine to shame, so I accept completely your thoughts in that field. But even politics must, at some point, be restricted by economic realities. As I see it, politicians can employ creative financing for awhile, but eventually reality puts a stop to economically unsound activities. For instance, Chavez did as he pleased for a long time, but Venezuela's unrealistic economy eventually collapsed. I see the same for Canada's oil industry.

While, as you suggest, Canada can supply its own needs with its own oil regardless of economics, that only accounts for half of their production. To realize any financial benefit from the other half of their oil, they must sell it outside of Canada. My assessment suggests that the netback they will receive after IMO2020 kicks in will be less than the cash cost of production. As happened earlier this year in Canada, that will result in a drop in production which could extend to half of the Canadian capacity. The price impact of the struggle that eventually results in that shut-in will dramatically lower the world price of oil, as Canadian suppliers cut their price to try to prevent Iraqi crude from pushing Canadian oil out of the US Midwest refineries by substituting lower cost Basrah heavy oil. The bottom line is that Canada will lose a large portion of the financial benefit currently received from current oil production.

If Canada does as you suggest and builds several highly uneconomic Northwest Upgraders to make diesel fuel from bitumen to flood a low-priced, already full market, I do not see that as getting them any benefit.

My simple mind remains convinced that you cannot put ten gallons of oil in a five gallon bucket. The global bucket will be full of lower cost crude. There will be no room for the quantity of oil sands production that the oil price bubble of the 2005-2014 time period produced. I suggest that that production, the worlds highest cost and poorest quality oil, will be withdrawn.

Edited by William Edwards
  • Like 2
  • Upvote 1

Share this post


Link to post
Share on other sites

William, politics will always prevail over economic realities. 

The Canadian Federal Govt has no political alternative to keeping Alberta oilsands and conventional oil production flowing. To do or allow otherwise would result in a staggering defeat for Justin Trudeau and the Liberals. 

If Western Canada Select cannot be refined via upgraders to displace diesel imports, or if there is too much of it, then I predict the excess will be burnt as bunker fuel in boilers.  It is going to get pumped, it is going to get used.  If Ottawa cannot find a market for it  (and you make a solid case for its unsaleability on world markets), then it will be used domestically, even if it ends up being sent to Port Churchill and burnt there as heating oil. Right now those folks use propane (and a lot of it), with lower caloric content, so mandating a switchover to boiler oil is entirely plausible. 

Every last drop will end up consumed domestically. Ottawa is quite capable of forcing that, and I predict it will.  I don't see any other alternative for the Liberal Party. 

  • Upvote 1

Share this post


Link to post
Share on other sites

27 minutes ago, Jan van Eck said:

William, politics will always prevail over economic realities. 

The Canadian Federal Govt has no political alternative to keeping Alberta oilsands and conventional oil production flowing. To do or allow otherwise would result in a staggering defeat for Justin Trudeau and the Liberals. 

If Western Canada Select cannot be refined via upgraders to displace diesel imports, or if there is too much of it, then I predict the excess will be burnt as bunker fuel in boilers.  It is going to get pumped, it is going to get used.  If Ottawa cannot find a market for it  (and you make a solid case for its unsaleability on world markets), then it will be used domestically, even if it ends up being sent to Port Churchill and burnt there as heating oil. Right now those folks use propane (and a lot of it), with lower caloric content, so mandating a switchover to boiler oil is entirely plausible. 

Every last drop will end up consumed domestically. Ottawa is quite capable of forcing that, and I predict it will.  I don't see any other alternative for the Liberal Party. 

Respectfully, Jan, I remain unconvinced. The high sulfur content of bitumen places real restrictions on its utilization in ship or utility boilers. The "green" experts would balk at the environmental impact of substituting 5% S bitumen for no-sulfur propane burning in Canada. The main difference that I see in our positions is quantitative. Finding a new outlet for two million barrels a day of 5% S oil which costs more than it is worth is a huge challenge.

  • Like 1

Share this post


Link to post
Share on other sites

Just now, William Edwards said:

Respectfully, Jan, I remain unconvinced. The high sulfur content of bitumen places real restrictions on its utilization in ship or utility boilers. The "green" experts would balk at the environmental impact of substituting 5% S bitumen for no-sulfur propane burning in Canada. The main difference that I see in our positions is quantitative. Finding a new outlet for two million barrels a day of 5% S oil which costs more than it is worth is a huge challenge.

William, the "green experts" in Canada are going to get shut down.  Ottawa will be forced to cram a solution to use the stuff, there is no other palatable political alternative.  Leaving the WCS in the ground is not an option - not if they want to survive as a political party.  I lived in Canada when Justin's father Pierre Elliott was the Prime Minister, and the leftist separatists were causing chaos in the streets of Montreal.  Pierre declared martial law and sent in the Army, doing mass arrests of street provocateurs at gunpoint.  When asked by  reporter, just how far he would go, PET replied,  "Just watch me."

Never underestimate the raw ruthless power of the Trudeaus and the Liberal Party of Canada. 

  • Like 1

Share this post


Link to post
Share on other sites

Just now, Jan van Eck said:

William, the "green experts" in Canada are going to get shut down.  Ottawa will be forced to cram a solution to use the stuff, there is no other palatable political alternative.  Leaving the WCS in the ground is not an option - not if they want to survive as a political party.  I lived in Canada when Justin's father Pierre Elliott was the Prime Minister, and the leftist separatists were causing chaos in the streets of Montreal.  Pierre declared martial law and sent in the Army, doing mass arrests of street provocateurs at gunpoint.  When asked by  reporter, just how far he would go, PET replied,  "Just watch me."

Never underestimate the raw ruthless power of the Trudeaus and the Liberal Party of Canada. 

I suspect that we will not have to wait long for our difference to be resolved. January 2020 is rapidly approaching.

Share this post


Link to post
Share on other sites

16 minutes ago, William Edwards said:

I suspect that we will not have to wait long for our difference to be resolved. January 2020 is rapidly approaching.

I predict the IMO is going to blink and the new standards for sulfur will be postponed. 

The shipowners are massively unprepared and even if everybody wanted to go to marine gasoil, there is not enough of the stuff to fill up every ship's tanks. What is IMO going to do, stand on its pronouncements and shut down the world marine trade?  Not likely. 

It reminds me of the USA Rail authorities requiring positive train control a decade ago; not much closer to that goal today.  It constantly gets set back.  

  • Like 1

Share this post


Link to post
Share on other sites

1 minute ago, Jan van Eck said:

I predict the IMO is going to blink and the new standards for sulfur will be postponed. 

The shipowners are massively unprepared and even if everybody wanted to go to marine gasoil, there is not enough of the stuff to fill up every ship's tanks. What is IMO going to do, stand on its pronouncements and shut down the world marine trade?  Not likely. 

It reminds me of the USA Rail authorities requiring positive train control a decade ago; not much closer to that goal today.  It constantly gets set back.  

I have been observing the discussion from time to time around here about this.  My reaction has always been "really?", and I have to say I think the shipping companies in private will simply say "kiss my bilge".  Publicly, the shippers will promise to the heavens that they will of course comply, but that they just can't right now for this reason or that.  What are the authorities going to do, stop shipping?  Hah!

  • Like 1

Share this post


Link to post
Share on other sites

11 minutes ago, Jan van Eck said:

I predict the IMO is going to blink and the new standards for sulfur will be postponed. 

The shipowners are massively unprepared and even if everybody wanted to go to marine gasoil, there is not enough of the stuff to fill up every ship's tanks. What is IMO going to do, stand on its pronouncements and shut down the world marine trade?  Not likely. 

It reminds me of the USA Rail authorities requiring positive train control a decade ago; not much closer to that goal today.  It constantly gets set back.  

I agree that it is likely that the IMO will cut the industry some timing slack. But I expect it to be timing only. 

For you information, there is a low cost way to create additional MDO while eliminating high sulfur bunker fuel. Simply shut in high sulfur Canadian production and replace that quantity in the global market with Permian production. Two million barrels a day of that switch solves the quantity problem while reducing the cost of supply to the industry.

  • Like 1

Share this post


Link to post
Share on other sites

10 minutes ago, Dan Warnick said:

I have been observing the discussion from time to time around here about this.  My reaction has always been "really?", and I have to say I think the shipping companies in private will simply say "kiss my bilge".  Publicly, the shippers will promise to the heavens that they will of course comply, but that they just can't right now for this reason or that.  What are the authorities going to do, stop shipping?  Hah!

Dan, keep in mind that there are multiple jurisdictions involved, and thus multiple players and multiple bureaucrats.  You have the trans-ocean controller, the IMO, which is setting the new 0.5% sulfur limit.  Then you have in-port jurisdictions, large harbors such as Antwerp, who can and will set a 0.1% limit.  Then you have the Port of Los Angeles and the Port of Long Beach, which I predict will require pure diesel from 20 miles out, and may well require electric tugboats for the last two miles in and out.  So you have all these players and they have conflicting and competing agendas. 

Of the players, I predict the IMO will blink first. However, the California ports are not going to blink. The non-compliant boat will either pay to be towed in and out, or it will be sent away.  Californians are huge on compliance.  Indeed, I think that bureaucracy invented the concept. 

  • Like 1

Share this post


Link to post
Share on other sites