U.S. oil exports boom, putting infrastructure to the test

NEW YORK/HOUSTON, Oct 30 (Reuters) - Tankers carrying record levels of crude are leaving in droves from Texas and Louisiana ports, and more growth in the fledgling U.S. oil export market may before long test the limits of infrastructure like pipelines, dock space and ship traffic.
U.S. crude exports have boomed since the decades-old ban was lifted less than two years ago, with shipments recently hitting a record of 2 million barrels a day. But shippers and traders fear the rising trend is not sustainable, and if limits are hit, it could pressure the price of U.S. oil.
How much crude the United States can export is a mystery. Most terminal operators and companies will not disclose capacity, and federal agencies like the U.S. Energy Department do not track it. Still, oil export infrastructure will probably need further investment in coming years. Bottlenecks would hit not only storage and loading capacity, but also factors such as pipeline connectivity and shipping traffic.
Analysts believe operators will start to run into bottlenecks if exports rise to 3.5 million to 4 million barrels a day. RBC Capital analysts put the figure lower, around 3.2 million bpd.The United States has not come close to that yet. A total of the highest loading days across Houston, Port Arthur, Corpus Christi and St. James/New Orleans - the primary places where crude can be exported - comes to about 3.2 million bpd, according to Kpler, a cargo tracking service.
But with total U.S. crude production currently at 9.5 million barrels a day and expected to add 800,000 to 1 million bpd annually, export capacity could be tested before long. Over the past four weeks, exports averaged 1.7 million bpd, more than triple a year earlier.
"Right now, there seems to be a little more wiggle room for export levels," said Michael Cohen, head of energy markets research at Barclays.
"Two to three years down the road, if U.S. production continues to grow like current levels, the market will eventually signal that more infrastructure is needed. But I don't think a lot of those plans are in place right now."
If exports do hit a bottleneck, it would put a ceiling on how much oil shippers get out of the country. Growing domestic oil production and limited export avenues could sink U.S. crude prices.Shippers have booked vessels to go overseas in recent weeks because the premium for global benchmark Brent crude widened to as much as $7 a barrel over U.S. crude , making exports more profitable for domestic producers.
EXPORT PLANS
Exports could hit 4 million bpd by 2022, an Enterprise Products Partners LP executive told an industry event in Singapore recently.
Though some operators are already eyeing expansion plans, there are limitations, said Carlin Conner, chief executive at SemGroup Corp, which owns the Houston Fuel Oil Terminal. SemGroup has three docks for exporting crude and is building additional ones.
"There aren't very many terminals with the needed pipeline capabilities, tank farm capacity and proper docks to load the ships ... Adding this is expensive and not done easily. So there are limitations to unfettered export access," he said.
For instance, exports are expected to start from the Louisiana Offshore Oil Port (LOOP) in early 2018 at around one supertanker a month, according to two sources. The LOOP is potentially a key locale for exports. Its location 18 miles (29 km) offshore means it can handle larger vessels than other, shallower ship channels.While LOOP can load around 40,000 barrels per hour, operating at that capacity is not likely because that same pipe is used to offload imports, the sources added. LOOP did not respond to a request for comment.
In Houston, when looking at the top 30 loading days, crude exports averaged 700,000 bpd, Kpler added. That includes Enterprise's Houston terminal, among the largest of the export facilities, that had 615,000 bpd.
Other terminal operators are also developing additional facilities. NuStar Energy LP currently can load between 500,000 to 600,000 bpd at its two docks in Corpus Christi, which has about 1 million in capacity, according to a port spokesman. NuStar is developing a third dock, which should come online either late first quarter or early second quarter.
In Houston, Magellan Midstream Partners LP is planning a new 45-foot draft Aframax dock for mid-2018. Aframax vessels can carry about 500,000 to 700,000 barrels of crude. (Reporting by Catherine Ngai in New York and Bryan Sims in Houston;

Newest outpost for U.S. crude exports: India

NEW YORK/NEW DELHI (Reuters) - India is set to emerge as a key market for American crude exports in coming months, as refineries in that country are ramping up "test" purchases of U.S. grades to diversify their imports.
U.S. exports recently set a weekly record with nearly 2 million barrels of crude a day sent overseas. But shipments to India have been rare, with just a few deliveries since the U.S. lifted its ban on crude exports in late 2015.
Indian refineries are starting to increase purchases as the country seeks to secure more supply from outside the Middle East. Refiners are testing both U.S. sweet and sour crudes in their facilities, a common practice when importing crude from new sources.
"A lot of these (Indian refiners) want to see what it's like if they run it," said one Houston-based oil broker. "They want to get a taste of U.S. crude."
Those refiners are taking advantage of a wide spread between U.S. oil and other global benchmarks, which has created an attractive discount on American crude grades.
Foreign refiners, including those in India, have bid up those physical grades against the U.S. crude benchmark to multi-year highs, traders and brokers said. That includes onshore grades from the Permian Basin in West Texas and the Eagle Ford further east, as well as offshore U.S. Gulf grades including Mars Sour and Southern Green Canyon.
In June, Indian Prime Minister Narendra Modi and U.S. President Donald Trump met and discussed energy exports to India. Since then the Modi administration has been encouraging more crude imports by waiving some shipping requirements.
Indian refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corporation Limited were given a special permission by the shipping ministry to import oil from the United States until March.
"They've been stepping up to be a sizeable importer; they're looking to diversify away from the Middle East," said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.
The executive of India's state-owned Hindustan Petroleum Corp Ltd said in August the company was assessing whether U.S. crude could replace Nigerian barrels; it made its first buy of U.S. oil in September.
One supertanker carrying nearly 2 million barrels discharged in India earlier this month, according to Eikon shipping data, while two other vessels carrying a combined 3 million barrels are set to arrive in November.
Prior to this, U.S. crude rarely went to India, with only one month this year - February - showing deliveries, according to U.S. EIA data through July.
In August, IOC bought 950,000 barrels of light sweet Eagle Ford shale oil and 950,000 barrels of heavy sour Mars crude for end-October delivery from trading firm Trafigura. In October the company bought 1 million barrels each of U.S. Southern Green Canyon (SGC) and WTI Midland crude.
In October, India's Reliance Industries Ltd, the world's largest refining complex, purchased 1 million barrels of Midland and a similar-sized cargo of Eagle Ford crude for November delivery.

Export Summary-U.S. sells soy to Mexico; South Korea buys corn

Sept 13 (Reuters) - Snapshot of the global export markets for grains, oilseeds and edible oils as reported by government and private sources as of the end of business on Wednesday:
SOYBEAN SALE: The U.S. Department of Agriculture said private exporters sold 167,370 tonnes of U.S. soybeans to Mexico for delivery during the 2017/18 corn marketing year that began Sept. 1.
CORN PURCHASE: South Korea's largest feedmaker Nonghyup Feed Inc. (NOFI) bought 138,000 tonnes of corn in an international tender which closed on Wednesday, European traders said. NOFI had also sought 65,000 tonnes of feed wheat, but rejected all offers and made no purchase.
CORN PURCHASE: A group of Israeli private buyers bought at least 30,000 tonnes of corn in a tender which closed on Wednesday, European traders said. The corn was expected to be sourced from the Black Sea region. It was purchased at around $172.80 a tonne c&f for November/December shipment. The group also purchased about 13,000 tonnes of feed wheat at around $182 a tonne c&f. No purchase was believed to have been made of 20,000 tonnes of feed barley also tendered for.
WHEAT TENDER PASSED: Jordan's state grain buyer made no purchase in an international tender to buy 100,000 tonnes of milling wheat which closed on Wednesday, European traders said. A new tender is expected to be issued in coming days, closing on Sept. 20, they said.
FEED WHEAT AND BARLEY PURCHASE: Japan's Ministry of Agriculture said it would import 100 tonnes of feed-quality wheat, and 6,000 tonnes of barley for livestock use, via a simultaneous buy and sell (SBS) auction that closed late on Wednesday.
PENDING TENDERS:
RICE TENDER UPDATE: The lowest offer in a tender from Bangladesh's state grains buyer to buy 50,000 tonnes of rice which closed on Tuesday was $438.00 a tonne CIF liner out, sources in the country's grains buying agency and European traders said. The offer was submitted by Thailand-based trading company Siam Rice trading. Offers were still being considered and no purchase had yet been made, they said.
BARLEY TENDER: Algeria's state grains agency issued an international tender to purchase a nominal 35,000 tonnes of feed barley, European traders said. Origin was optional and tender deadline is Sept. 13, they said. Shipment was sought between Nov. 1-15 in at least two consignments.
WHEAT TENDER: Japan's Ministry of Agriculture is seeking to buy a total of 139,382 tonnes of food-quality wheat from the United States, Canada and Australia in a regular tender that will close late on Sept. 14.
FEED BARLEY TENDER: Jordan's state grain buyer issued another international tender to purchase 100,000 tonnes of animal feed barley to be sourced from optional origins, European traders said. Tender deadline is Sept. 14. Traders had been anticipating a new tender after Jordan made no purchase in its previous tender for 100,000 tonnes of barley on Sept. 7.
SOYBEAN TENDER: South Korea's state-backed Agro-Fisheries & Food Trade Corp issued international tenders to purchase around 10,000 tonnes of soybeans free of genetically modified organisms. The registration deadline to participate in both tenders is Sept. 14 with offers to be submitted on Sept. 15, they said.
SOYMEAL TENDER: Iranian state-owned animal feed importer SLAL issued an international tender to purchase about 200,000 tonnes of soymeal, European traders said. Offers in the tender must be submitted on Oct. 2. The soymeal can be sourced from Argentina or Brazil only and prices must be submitted in euros.