OTC: Shuttle tankers contemplated as alternative to pipelines in Gulf of Mexico

May 5, 2003
Shuttle tankers used in conjunction with separate storage vessels offer a future option for transporting crude oil in the Gulf of Mexico, provided certain conditions are met, said panelists Monday at the Offshore Technology Conference in a news conference.

By Paula Dittrick
Senior Staff Writer
HOUSTON, May 5 -- Shuttle tankers used in conjunction with separate storage vessels offer a future option for transporting crude oil in the Gulf of Mexico, provided certain conditions are met, said panelists Monday at the Offshore Technology Conference in a news conference.

Shuttle tankers would provide an alternative to pipelines as a way to transport oil from offshore platforms to refineries. No shuttle tankers currently exist in the gulf, and they would have to be built in the US under the Jones Act and must have a double-hull to comply with the Oil Pollution Act of 1990.

Houston-based American Shuttle Tankers LLC (AST) is in discussion with the majors and many independents regarding the use of a separate storage vessel and a shuttle tanker, said Peter Lovie, the firm's vice-president of business development.

Speaking to reporters after a news conference, he said a producer could make a commitment within a year to agree to use American Shuttle Tankers as a transportation contractor, and that it would take 2-3 years before a shuttle tanker could be built and put into service in the gulf.

The US Minerals Management Service is contemplating the potential of shuttle tankers in the gulf as a way to transport crude oil through its royalty-in-kind payments, confirmed Milt Dial, MMS assistant program director, RIK minerals revenue management.

"We will explore all reasonable methods of lowering transportation costs involved in royalty asset sales. Shuttle tankering may be one of those options. We are on the front-end of discussions," about that, Dial said.

PFC Energy, a Washington-based consultant, believes that the gulf will have excess transportation capacity in 3-5 years in areas where the infrastructure is well developed, said Mike Rodgers, PFC upstream group senior director of the exploration and production portfolio and business development unit.

But Rodgers noted that some areas have less infrastructure, particularly in some of the deepwater exploration areas where companies increasingly are now shifting their focus.

Shuttle tanker logistics
AST is owned equally by Skaugen PetroTrans Inc. of Houston and Navion ASA of Stavanger. Skaugen provides lightering services in the gulf while Navion operates a fleet of shuttle tankers in the North Sea.

Lovie said the economics of crude oil transportation by shuttle tankers compared with pipelines would vary on a case-by-case basis, and he declined to give any specific examples or model projections.

A gulf shuttle tanker would have 565,000 bbl of oil capacity, while a separate storage vessel would have 750,000-800,000 bbl capacity, Lovie said.

"Shuttle tankers can work with any floating production installation: semisubmersibles, spars, tension leg platforms, and floating production, storage, and offloading vessels," he said.

The advantage of shuttle tankers is that they can serve any floating production unit and can go to any port that the producer desires. Producers would enjoy freedom to sell their crude for the best price, freedom for each production hub partner to sell its production separately, and freedom from quality bank penalties, Lovie said.

Crude oil from various sources is commingled in a pipeline, but oil put into a shuttle tanker would not be commingled with oil from other producers, Lovie said.

He envisions a field using multiple shuttle tankers plus one storage vessel adjacent to the platform. Several storage vessels exist already, he said.

Contact Paula Dittrick at [email protected].