A massive overbuild in CBR terminals on Gulf

[BOB WITHORN]

I apologize if I missed this somewhere else on here but,

Great report / article at RBN Energy LLC by Sandy Fielden on 4/17/16. Nine parts analizing what happened to CBR.

In January 2013 CBR into Gulf Coast terminals was 450 MB/D, (M is thousand in business world), by January 2016 CBR was down to 142 MB/D. Now the good part, unload terminal capacity in January 2016 was 1.7 MMB/D, that is 1.7 million barrels per day, only maybe 12 times more capacity than current shipments. In the report they state that more terminals are still under construction. Some are financed by "Take or Pay" investments, (I think that's I take the profit or I get to pay the losses). 

So what do you do with a new unused tankcar unloading terminal.

Bob

[Murphy Siding]

BOB WITHORN

So what do you do with a new unused tankcar unloading terminal.

Bob

 

Wait it out until the pendulum swings the other way.  Then they will be given great praise for their foresight in being ahead of the demand curve.  Energy costs- especially oil- tend to bounce up and down like a yo-yo.

[Bruce Kelly]

Meanwhile...

http://www.naturalgasintel.com/articles/106135-hess-exports-first-bakken-crude

http://thebakken.com/articles/1526/hess-corp-makes-history-with-first-export-of-bakken-crude

http://abcnews.go.com/US/wireStory/oil-tanker-laden-north-dakota-crude-reaches-netherlands-38552373

 

 

[Paul_D_North_Jr]

"Take or pay" means the customer pays for the contracted amount of usage or capacity, whether or not it is actually used.

Kind of like booking a room at a hotel - you pay even if you don't show and and never use the room.

- Paul North.

[MidlandMike]

In addition to some of the facilities being available to export crude, they also give flexibility to send crude by tanker to US east coats refineries.

[BOB WITHORN]

An and-on to this in the last installment of the article says CBR will not ever return to what it was. It served its purpose as a fill-in.

 

Also lease rates for tank cars has dropped from a peak of $2750.00 / month in 2013 - 2014, to a current price of $325.00 / month.

 

Bob

[MidlandMike]

Here is the reference for the final CBR summary installment mentioned above.  All interested in CBR should read it.

https://rbnenergy.com/slow-train-coming-victory-of-american-ingenuity-over-crude-pipeline-delays-and-congestion