LOUISIANA – For the first time in two years, clients of the Louisiana Offshore Oil Port didn’t export any crude oil to customers in February after a particularly busy January.
In the first two months of this year, the port saw both a record high and then zero exports — going from eight oil tankers leaving the port in January to none one month later, according to ship tracking data compiled by Bloomberg.
However, that February drop-off was short-lived; LOOP already has seen a 2 million-barrel-capacity tanker depart in March, according to ship vessel data.
“It looks like it’s an anomaly,” said Matt Smith, director of commodity research for Clipper Data. “There was a huge drop off from where we were in January and I’m not exactly sure why. It’s not a seasonal thing. Crude oil demand has been surprisingly strong.”
Oil exports across the U.S. hit 3.3 million barrels each day in late February 2019, growing to 3.5 million barrels in February 2020, according to the Energy Information Administration. That was just before the coronavirus pandemic prompted travel restrictions worldwide, but demand for crude oil exports remained relatively steady over the year. Late last month, total U.S. exports were down but still at 2.3 million barrels each day, according to EIA data.
LOOP is not considered a bellwether for all U.S. crude exports. U.S. Gulf Coast exports in aggregate is a better metric, Smith said.
“It’s difficult to look at LOOP and determine whether it’s a supply or demand issue,” he said. “The OPEC production cut has driven up demand for heavier crude. Perhaps that’s why we saw so much (oil) leave in January 2021.”
LOOP, a joint venture of Marathon Pipe Line LLC, Shell Oil Co. and Valero Terminaling and Distribution Co., declined to comment.
LOOP sits about 20 miles south of Port Fourchon in 110 feet of water and is the only U.S. offshore oil export terminal capable of loading supertankers that can carry upward of 2 million barrels of oil.
For most of its history, LOOP was an import terminal, handling roughly 300 vessels each year from countries such as Saudi Arabia, Iraq and Venezuela until the decadeslong ban on U.S. crude oil exports was lifted in December 2015.
LOOP mostly exports sour crude oil, which is produced in the Gulf of Mexico by the Mars platform, a joint venture between Shell and BP.
Demand for Mars crude, which is heavier than what is produced in the West Texas Permian Basin and other shale plays, is in competition with countries in the Middle East.
The Organization of Petroleum Exporting Countries, or OPEC, decided to cut crude oil production between January and March. Saudi Arabia, in particular, promised to reduce oil production by 1 million barrels per day in February and March.
That move prompted Mars crude oil demand from countries in Asia, such as China, analysts say.
In January, LOOP clients exported 15 million barrels of U.S. crude oil to customers in China, South Korea and India, according to the Bloomberg analysis.
“The economics to export Mars crude oil was not good in February,” said Emmanuel Belostrino, crude oil market analyst at data intelligence company Kpler. “It was likely more economical for Mars buyers in Asia to source their medium sour crude elsewhere, like the Middle East.”
With permitting underway for four more deepwater U.S. crude oil export terminals, it’s unclear whether there would be enough demand for more than one or two additional projects, experts say.
