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Topics

1. Waterborne Transportation

2. Shipping Costs

3. Oil Spills

4. Storage Facilities

5. Oil Pipelines

6. References

How Are Crude Oil and Refined Products Transported?

Crude oil must be moved from the production site to refineries and from refineries to consumers. These movements are made using a number of different modes of transportation. Crude oil and refined products are transported across the water in barges and tankers. On land crude oil and products are moved using pipelines, trucks, and trains.
 

Waterborne Transportation

Crude oil tankers are used to transport crude oil from fields in the Middle East, North Sea, Africa, and Latin America to refineries around the world. Product tankers carry refined products from refineries to terminals.

Tankers range in size from the small vessels used to transport refined products to huge crude carriers. Tanker sizes are expressed in terms of deadweight (dwt) or cargo tons. The smallest tankers are General Purpose which range from 10 to 25,000 tons.

These tankers are used to transport refined products. The Large Range and Very Large Crude Carriers (VLCC) are employed in international crude oil trade. The size of tanker that can be used in any trade (commercial voyage between a port of origin and destination) is dependent on the tanker's length and loaded depth and the size of the loading and unloading ports.

The larger ships are used because they reduce the cost to transport a barrel of crude oil.

As of 2006:

	The world tanker fleet had 4,186 vessels with a carrying capacity of 358.8 Mdwt.
	84% of the tanker fleet were owned by independent tanker companies.
	The average age of the fleet was 11.9 years.
	68% of the vessels are double hull ships.

Click on the link to see tanker video - Shipping is Big Business.

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Shipping Costs

The following table illustrates the costs between different locations.

[Source: Average data for February 2009 as published in the Oil & Gas Journal from Drewry Shipping Consultants Ltd.]

As illustrated in the above chart, types of cargo and distance determined freight rates.

Note the different costs for distillate deliveries to New York from the Caribbean and N. Europe.

Also see the differences among shipments of crude oil to Houston from N. Europe, West Africa and the Persian Gulf.

The size of the ship used also affects costs as seen by the costs to deliver RFO (residual fuel oil to Houston from the Caribbean.

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Although they get most of the publicity, oil spills only account for 12% of all spills.  The major cause of ocean oil pollution is industrial waste (61%). Tanker accidents contribute 5% and tanker operations account for 7%. Other shipping accounts for 14%. Better operations and improved ship design have helped reduce the number of large spills. During the decade from 1985-1994, the frequency of large spills declined by 57%.

Although the Exxon Valdez gets blame for the "world's largest oil spill," it's only the 52nd biggest spill. Iraq's Saddam Hussein gets the "credit" for the largest. 

U.S. tankers are constructed and operated under strict regulations. Companies use a communication network of telephone, telex, and satellite systems to locate their tankers. On board the ships, crews follow strict safety measures, minimizing loss of personnel and product. Automatic collision avoidance systems track approaching ships, alerting a tanker to an obstruction on its course.

There have been many developments in improving the tanker operations to reduce the frequency and amount of oil spilled. At one time, tankers discharged dirty ballast water (oil mixed with sea water into the ocean). Improvements have been made in tanker design and now discharge of oily water is now illegal. In the past, after oil tankers discharged their cargo, they pumped sea water into the oil storage containers to provide ballast for the return trip. When the ship arrived at the loading port, this oily ballast was discharged into the ocean and crude oil was pumped into the ship's containers. Now new tankers have segregated ballast tanks. These ships have tanks that are solely used for ballast and water and oil are kept apart.

New tanker design also requires ships to have double-hull construction in accordance to the Oil Pollution Act of 1990. Double-hull construction is required on new ships built after 1993. These vessels now represent 14% of the world's tanker fleet.

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Crude oil and refined products are stored in tanks for shipment to other locations or processing into finished products. There are four basic types of tanks used to store petroleum products: (1) Floating Roof Tank used for crude oil, gasoline, and naphtha, (2) Fixed Roof Tank used for diesel, kerosene, catalytic cracker feedstock, and residual fuel oil, (3) Bullet Tank used for normal butane, propane, and propylene, and (4) Spherical Tank used for isobutane and normal butane.

The amount of crude oil and refined products in storage is reported by Energy Information Administration.  While the actual volume is important, a better index is the number of days of supply available.  This number reflects the volume that can be supplied to run refineries (crude oil) or the volume of refined products that are available to meet demand.

Please click on the link Crude Oil and Product Stocks

Please click on the Energy Information Administration's Topics for Petroleum Stocks 

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Pipelines are the most efficient method to transport crude oil and refined products. Pipelines are used to move crude oil from the wellhead to gathering and processing facilities and from there to refineries and tanker loading facilities. Product pipelines ship gasoline, jet fuel, and diesel fuel from the refinery to local distribution facilities.

Crude oil is collected from field gathering systems consisting of pipelines that move oil from the wellhead to storage tanks and treatment facilities where the oil is measured and tested. From the gathering system the crude oil is sent to a pump station where the oil delivered to the pipeline.

The pipeline may have many collection and delivery points along route. Booster pumps are located along the pipeline to maintain the pressure and keep the oil flowing. The delivery points may be refineries, where the oil is processed into products, or shipping terminals, where the oil is loaded onto tankers.

A pipeline may handle several types of crude oil. The pipeline will schedule its operation to ensure that the right crude oil is sent to the correct destination. The pipeline operator sets the date and place when and where the oil is received and the when the oil will arrive at its destination. Crude oil may also move over more than one pipeline system as it journeys from the oil field to the refinery or shipping port. Storage is located along the pipeline to ensure smooth continuous pipeline operation.

After crude oil is converted into refined products such as gasoline, pipelines are used to transport the products to terminals for movement to gasoline stations. In addition to gasoline, products pipelines are used to ship diesel fuel, home heating fuel, kerosene, and jet fuel. Because product pipelines are used to move many different products, the different types of products are shipped in batches.

Batching is used to move two or more different liquids through the same pipeline. The liquid are transported in a series of batches. The adjoining batches mix where they come into contact. This mixed stream may be sent to refinery for re-refining, sold as a lower valued product such as a mixture of premium unleaded gasoline with regular unleaded gasoline, or sold as mixture. Many product pipelines have standard product specifications. This allows one company to ship gasoline over the line and get not be concerned whether he receives gasoline from that same batch. Its all the same quality. Individual additive packages are added at the distribution terminals.

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References

Check out the following references to learn more about drilling operations:

Oil & Gas Pipelines in Nontechnical Language, Thomas O. Miesner and William L. Leffler.

Click on the following links to learn more about oil transportation:

	From T-2 to Supertanker: Development of the Oil Tanker, 1940-2000, Andrew G. Spyrou.
	Colonial Pipeline Company
	FERC
	Intertanko Annual Report and Review 2005
	Oil Pipeline Companies
	Pipeline 101
	Poten & Partners
	Shell Oil Company - Pipelines and Tankers
	Tanker Operations
	Texas Monthly Condensate Report
	Texas Monthly Natural Gas Pipeline Report
	Trans Alaskan Pipeline System
	Pipeline Transport - Wikipedia
	Oil Tanker - Wikipedia

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