Happy St Patrick's Day -- Monday, 2014

Active rigs:

	3/17/2014	03/17/2013	03/17/2012	03/17/2011	03/17/2010
Active Rigs	190	185	205	170	103

RBN Energy: the Jones Act and CBW.

The requirements the Jones Act places on ships operating between U.S. ports add significant costs, including those that are associated with less-favorable economies of scale at U.S. shipyards, a lower level of competition among U.S. ship builders, and higher wages and insurance costs for Jones Act workers.   Those higher costs have reduced the number of ships built for “coastwise” and inland movement of crude oil, and the relatively small size of the U.S.-flagged fleet and increased competition for Jones Act vessels has resulted in sharply higher charter costs and shipping fees. And charter costs and shipping fees, of course, are key factors in determining whether transporting crude on a Jones Act vessel makes economic sense in a particular situation.

As we noted above, the demand for Jones Act vessels is at or near an all-time high, mostly due to the boom in crude-by-water. As noted above, the utilization rate for inland tank barges currently is between 90% and 95%, and the utilization rate for coastwise tankers and barges is at about 90%; 95% utilization is considered to be the maximum achievable rate.

New Jones Act tankers and barges are being built to address that shortfall in capacity. For example, SeaRiver Maritime, a wholly owned subsidiary of ExxonMobil, is awaiting delivery later this year of two crude tankers. And State Class Tankers, which is being acquired by Kinder Morgan Energy Partners, has commissioned the construction of four Medium Range (MR) Jones Act tankers, each with a capacity of 330 MBbl, that will be delivered over the next two years.  But some new vessels being built are replacing older tankers and barges being retired, and the potential for more additions to the Jones Act fleet is limited by the capacity of U.S. shipyards to build them.

Finally, the report provides an extensive listing of leading Jones Act vessel owners—and, in an appendix, a list of the 42 U.S.-flagged coastal tankers and a list of 49 articulated tug barges (ATBs) with capacities of 140 MBbl or more. The owners list includes companies such as Crowley Maritime and Kirby Corp. that focus on shipping, as well as producers (ExxonMobil and ConocoPhillips, among others) and midstream companies with Jones Act vessel fleets. The list details the companies’ vessel assets, and publically announced plans to acquire additional tankers and barges.

The Jones Act trade will continue to evolve, of course, as oil price differentials change, new pipeline capacity becomes available, and the costs associated with Jones Act shipping rise and fall. But our Crude-by-Water and the Jones Act report provides a detailed perspective on the subject, and important, up-to-date information for crude oil producers and marketers angling to maximize their crude oil netbacks.

The Wall Street Journal

Two old stories getting older: the missing plane and the massing of troops along the Crimean border.
 
 Surgeon General nominee on hold.

Presidential elections in Syria scheduled for this summer.

The Los Angeles Times

Two old stories getting older: the missing plane and the massing of troops.