Foreign Flagged Ship to load Alaska oil in three decades
A cargo of Alaska North Slope crude is scheduled to load next week aboard a foreign-flagged tanker for the first time in more than 30 years.
The Bahamas-flagged Tianlong Spirit, currently off the coast of California, is set to load a 136,000-ton cargo around July 25 from Alaska and then head for the Far East, according to ship tracking and fixture data compiled by Bloomberg.
“This would be the first time since the mid-1980s that a foreign-flagged ship would have loaded ANS crude for shipment,” David St. Amand, president of Navigistics Consulting in Box borough, Massachusetts, said by phone.
When Congress scrapped laws restricting most American crude exports, the end of a ban on foreign-flagged tankers shipping crude from Alaska came as part of the package. That opened markets in Asia and Europe to U.S. oil, offering Alaskan producers another destination besides the West Coast.
“BP chartered a foreign flag vessel for the transport of ANS crude for commercial and operational reasons,” BP Plc spokeswoman Dawn Patience said in an email. “BP will receive all the needed approvals from the State of Alaska and USCG before sailing.”
Since the 40-year ban was lifted late last year, there has been one ANS crude export. BP delivered a roughly 1-MMbbl cargo of ANS crude to JX Nippon into Japan in June using a U.S.-flagged tanker.
Royal Dutch Shell Plc’s decision last week to walk away from its $7 billion drilling effort in the Alaska Arctic could have a negative impact on the state’s already struggling economy, Moody’s said in a note released on Oct. 5.
Although the exploration and drilling would have occurred in federal water and would not have directly contributed to state revenues, the decision to stop the project is still “credit negative” for Alaska, the ratings agency said.
That is because Shell’s efforts to tap the estimated 29 billion barrels of oil and gas would have provided indirect benefits to the state’s economy through job generation and improved economic viability of the underutilized Trans-Alaska Pipeline System, Moody’s said.
Shell’s decision to abandon the project was driven in part by low crude oil prices, which have fallen from their 2014 peak of $107 per barrel in June to approximately $45 currently.
Prolonged low prices have already taken a toll on Alaska, which derives approximately 90 percent of its revenues from oil.
State revenues for fiscal 2015 of $2.3 billion were down 57 percent from $5.4 billion the prior year. The state has been draining about $250 million per month from its substantial reserves to support its fiscal 2016 budget.