Keystone Or No Keystone: Canadian Heavy Oil Reaches Gulf Coast -- RBN Energy -- March 3, 2015

President Obama given two pinocchios by Washington Post for his statements on Keystone XL. Fox News is reporting:

President Obama earned a double-barreled rebuke Monday from The Washington Post's fact-checker, for repeating a faulty claim that the Keystone XL pipeline "bypasses" the U.S. -- and for saying it would only carry "Canadian oil." 

The president made the claims in an interview last week with WDAY of Fargo, ND. Obama continued to downplay the impact of the Canada-to-Texas oil pipeline, just days after vetoing a bipartisan-backed bill that would approve the construction project. Senate Majority Leader Mitch McConnell, R-KY, has teed up a vote to override that veto later this week. 

In the local interview, Obama said: 

"I've already said I'm happy to look at how we can increase pipeline production for U.S. oil, but Keystone is for Canadian oil to send that down to the Gulf. It bypasses the United States and is estimated to create a little over 250, maybe 300 permanent jobs. We should be focusing more broadly on American infrastructure for American jobs and American producers, and that's something that we very much support." 

The president has been called out before for claiming the oil would bypass the U.S.

Active rigs:

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Active Rigs	119	189	184	207	170

RBN Energy: Canadian heavy oil starts to compete at Gulf Coast refineries.

Last week (February 19, 2015) Enterprise Product Partners announced the start of line fill on their 780 Mb/d ECHO to Beaumont/Port Arthur pipeline. The new route will open access for Canadian heavy crude shippers on the recently completed Seaway Twin pipeline from Cushing to Houston to 1.5 MMb/d of refining capacity in Beaumont/Port Arthur including 0.3 MMb/d of heavy crude coker processing. These refineries were a key target of the Keystone-XL pipeline from Canada to the Gulf Coast that still awaits approval. Today we look at demand and competition for Canadian heavy crude on the Texas Gulf Coast.

In Episode 1 of this two part series we looked at the rather painful progress developing pipeline infrastructure to deliver heavy Canadian oil sands crude to Gulf Coast refineries. Midstream developers have been beset by difficulties including headline grabbing delays to the Keystone XL pipeline and less dramatic but no less damaging setbacks to expansion of the Enbridge system. Since December about 240 Mb/d of heavy Canadian crude has flowed into the Houston Enbridge ECHO terminal on the Seaway Twin pipeline where it must now duke it out with incumbent suppliers to the Gulf Coast’s 1.5 MMb/d of heavy crude “coking” capacity. The largest of the incumbents is Mexican national oil company PEMEX that has already begun discounting it’s flagship Maya crude to do battle with Canadian producers.  In this episode we look at heavy crude refining capacity on the Texas Gulf Coast that Canadian barrels will be competing to supply. We also ponder how the volumes of crude flowing on Seaway Twin today will impact the incumbent suppliers.

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Update on West Coast ports job action. BunkerPortNews is reporting:

West Coast port terminals were inundated with inquiries from businesses across the U.S. that rely on the swift movement of their products, as port delays reached near gridlock. Mr. Molinaro said many of his customers, frustrated with their supply chain’s snail’s pace, insisted on coming to see and ask for themselves, “What is going on?”

All the pressure has management at the Southern California ports, which combined handle 40% of all containerized freight for the U.S., thinking about ways they can speed things up. Port terminals are developing new ways to organize cargo at the docks and systems for getting that cargo moving off the docks as quickly as possible. Software developed by a local technology startup called Cargomatic, a sort of Uber for moving cargo around the Los Angeles region, serves as one creative solution.

As contract talks between the Pacific Maritime Association and the International Longshore and Warehouse Union crept along, the line of massive ships in San Pedro Bay became longer and container stacks in the terminal yards rose higher. Even now, since a tentative contract was reached Feb. 20, experts estimate it could be as long as six months before shipping returns to normal, and the delays could cost retailers billions of dollars this year.

Some novel ideas:

So some terminals have been trying a novel idea: When a truck driver shows up, put the first container off the top of the stack on the truck and send it on its way. No more moving other containers around to dig out specific cargo—just get it all off the dock as fast as possible.

The concept isn’t entirely new. Many megaretailers use what is known as free-flow or peel-off operations at the ports. If there are enough containers destined for the same cargo owner, all arriving on the same ship, longshore crane operators can stack them together and load them on to the retailer’s trucks as they arrive.

Running operations on an app from Silicon Valley:

Other port terminals and trucking companies also are augmenting their free-flow programs. Last week, the Port of Los Angeles launched a similar system—minus the smartphone app—at four marine terminals. Under that program, as many as 600 containers a day could be moved off the docks as soon as they are unloaded from ships, Mr. Seroka said.

“Most shippers don’t have the volume to do this,” Cargomatic co-founder Brett Parker said. The software “allows multiple shippers and multiple carriers to participate in free flow,” he added.

Mr. Parker and co-founder Jonathan Kessler run Cargomatic out of an office in Venice, Calif., part of Southern California’s so-called Silicon Beach region. The app is also running in beta mode in New York City. In January, Cargomatic closed $8 million in venture-capital investment.

Though small in scale, the Cargomatic test proved to be a rare instance where the port’s productivity actually increased amid the labor strife. The average so-called turn time for Cargomatic truck drivers was 35 minutes, roughly half the time it usually takes under the standard dig-out process.