DAILY NEWS Apr 3, 2014 1:22 PM - 0 comments

Joint tanker venture on St. Lawrence to carry light Alberta crude

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By: Leo Ryan
2014-04-03

MONTREAL, Que.--Two 75,000-tonne tankers purchased from European owners should soon be carrying light Alberta crude oil from a storage terminal in Montreal East to a large refinery at Lévis, across the St. Lawrence River from Quebec City under a joint venture between a prominent Quebec shipping firm and a leading world independent refiner. Industry observers consider that global oil market conditions were a key catalyst for a transaction whose financial details were not disclosed.

Groupe Desgagnés and Valero Canada have bought the Panamax-size tankers, Stena Poseidon and Palva, owned by Concordia Maritime of Sweden and Neste Oil of Finland through newly-created Transport Maritime Saint Laurent inc.

The sister ships have Ice Class 1A certification, which allows them to navigate during the winter under icy conditions on the St. Lawrence River. They are slated for delivery later this spring.

Ross Bayus, president of Valero’s Canadian operations, indicated in a press release from Montreal on March 20 that once Enbridge “completes its 9B pipeline flow reversal project to Montreal, we will be able to supply 100 percent high quality North American light crude to our Jean Gaulin refinery in Lévis instead of bringing in crude from overseas.”

“This will allow us to take full advantage of our Montreal East terminal, the largest in Canada. Investments of more than $180 million are underway to adapt our oil handling and storage facilities in Montreal East and our infrastructures at the refinery in Lévis, which will create close to 200 jobs during the construction phase."

Several weeks ago, the Line 9B pipeline reversal gained qualified National Energy Board approval.

Under prolonged recent market trends, Alberta, Manitoba and Saskatchewan crudes have commanded substantially lower prices than the benchmark North Sea light oil categorized as Brent crude.

“Price differences in the order of 10, 15 or even 20 dollars (US) a barrel have appeared between foreign oil and those of the Canadian or American West,” Valero spokesman Michel Martin told Canadian Shipper. In such a context, access to various classes of oil produced in the western part of the North American continent has become a strategic matter for the survival of refiners in the eastern region, he added.

Refineries located in northeast North America operate in one of the world’s most competitive markets, he affirmed, before recalling that over the past few years six refineries which had become “non-competitive” had to close down – including a Shell facility in Montreal and Esso in Dartmouth, Nova Scotia.

“Access to light crude in the west is crucial for us to allow our refinery in Lévis to recapture the competitive level it had forged through the years,” Martin said, following investments of more than $2 billion in the 2001-2013 period.

“Operated by Desgagnés, these modern sister ships built in 2007 will be adapted to our needs over the coming months,” said Bayus. “To this effect, they will have equipment providing excellent manoeuvrability and safety at sea as well as safe docking. The ships, with their length of 228.50 meters and breadth of 32.24 meters, have a capacity exceeding 500,000 barrels (80,000 m³.), although the volumes carried during voyages between Montreal and Lévis will be limited to some 350,000 barrels (56,000 m³.), depending on the St. Lawrence River water levels and in accordance with safe navigation margins.”

Virtual maritime shuttle system

On average, Valero anticipates three vessel trips per week in a virtual shuttle system between Montreal and Lévis.

Louis-Marie Beaulieu, chairman and CEO of Groupe Desgagnés, stated: "In the marine sector alone, this project will create over 100 direct, top-quality, well-paid and permanent jobs. And that's without counting increased demand for related marine services, such as piloting and tugging, which - on top of numerous indirect jobs - will generate dozens of quasi-direct jobs."

With an annual turnover of C$230 million, Groupe Desgagnés operates a fleet of 18 vessels that trade on the Great Lakes/St. Lawrence waterway, the eastern Canadian Arctic, the East Coasts of Canada and the United States, and on all oceans of the globe.

Texas-based Valero Energy is the world’s largest independent refiner and marketer of petroleum products. Its assets include 16 refineries stretching from the U.S. West Coast and Gulf coasts to Canada and the United Kingdom offering an overall refining capacity of 3 million barrels a day.



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