Tesoro moves oil to Pacific on reversed Panama line
COMMENT: Interesting news item in the context of global oil distribution. Alaska's North Slope oil came onstream with the Trans-Alaska Pipeline in 1977. US law at the time prevented Alaska oil from being sold outside the United States. The consequence was that California and Washington State refineries had a captive supplier. The only alternative was an expensive protracted 40 day tanker route around Cape Horn to Gulf of Mexico refineries, as the very large crude carriers (VLCCs) were too large to pass through the Panama Canal.
The solution was the 81 mile Trans-Panama Pipeline (TPP) from the Pacific coast of Panama to the Atlantic coast, close to the border with Costa Rica. The TPP came onstream in 1982, capable of shipping 860,000 barrels per day. VLCCs would offload on the Pacific side, and other VLCCs would reload on the Atlantic side - a 10 day trip.
But declining production in both Alaska and California, and a lifting of the export ban in 1995 undermined the justification for TPP, and in 1996 the pipeline was shut down.
In more recent years, various proposals have emerged to start TPP up again, but this time reversed - shipping oil from Atlantic basin sources to Pacific destinations. Venezuela wants it to ship oil to China. BP has signed onto the project. And in this article, Tesoro just shipped the first boatload of Colombian oil to one of its refineries in California, and intends to use the TPP for oil from the North Atlantic and Africa, as well.
HOUSTON, Aug 27 (Reuters) - Tesoro Corp (TSO.N) has shipped its first barrels of crude oil from the Atlantic to the Pacific Basin on a reversed Panama pipeline, the company said Thursday.
Reversal of the 81-mile (130 km) Petroterminal de Panama pipeline, which formerly flowed from the Pacific to the Atlantic, creates a new oil conduit from the Atlantic to the Pacific and gives Tesoro access to more crude for its refineries in California, Washington, Hawaii and Alaska, the company said.
"In addition to exposing Tesoro to an array of crude oils typically marketed in the Atlantic Basin, our abilities to utilize the tankage dedicated for Tesoro's exclusive use at PTP and the reversed pipeline are expected to afford our company strategic advantages related to freight, storage, blending, and delivery scheduling optimization," said Doug Koskie, vice president of arbitrage trading for Tesoro Refining and Marketing Company.
The first oil through was Castilla blend from Colombia, which will be refined in California, Koskie said.
Tesoro is a leading independent producer of petroleum products, such as gasoline and diesel, in the western United States, including Alaska, and its seven refineries have a total capacity of 660,000 barrels per day.Posted by Arthur Caldicott on 30 Aug 2009