The first oil tanker carrying Bakken crude to Irving Oil Corp.’s refinery in Canada from Albany, New York, ran aground in the Hudson River, delaying the first of what is expected to be many voyages on the route.
No oil spilled from the Stena Primorsk, which was loaded with about 11.7 million gallons (279,000 barrels) of crude, said Petty Officer 2nd Class Erik Swanson, a spokesman for the U.S. Coast Guard, updating an earlier estimate of 6 million gallons. The accident occurred about 10 miles south of Albany at about 7 a.m., Swanson said.
U.S. crude output rose last week to the highest level since January 1994, Energy Department data show. The gains have been primarily light, low sulfur crude from Bakken and Eagle Ford shale formations in North Dakota and southern Texas. Refiners including Valero Energy Corp. and Irving are seeking to use less-expensive U.S. crude in eastern Canadian plants rather than more expensive cargoes from across the Atlantic Ocean.
“Exports to Canada will probably pick up quite a bit in the next year,” said Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London. “The repercussions will have more to do with how much the U.S. continues to displace West Africa. That’s the one that really competes with Brent.”
Bakken oil in Clearbrook, Minnesota, was about $23 a barrel less expensive today than North Sea Brent crude, the benchmark for overseas imports, according to data compiled by Bloomberg.
A glut of oil in the upper Midwest, where North Dakota output has jumped 57 percent in the past year, has led producers to ship oil out of the region to the East and West Coasts by train. Rail shipments in the third quarter have jumped almost fourfold from a year earlier, according to the Association of American Railroads.
The double-hulled vessel hit rocks after it left the shipping channel when a mechanical failure knocked out its steering, said Richard Hendrick, general manager of the Port of Albany. A tugboat and barge could be on site by 10 p.m. to begin lightering oil from the 600-foot (183-meter) tanker if the plan is approved by the Coast Guard, Hendrick said.
“We’re going to make sure their hull is safe and secure before we allow something like that,” Swanson said. He said the hull assessment could take hours, and it could be hours or days before the tanker can depart.
The vessel was en route to Irving’s St. John refinery in New Brunswick, Canada, Hendrick said. The ship was expected to return to Albany every eight days, which would make the crude shipment rate about 35,000 barrels a day.
“This is the first of a long string of planned shipments from the Port of Albany to Irving,” Hendrick said.
Valero has received approval from the Commerce Department to ship crude from the U.S. Gulf Coast to its Quebec City refinery, Bill Day, a company spokesman in San Antonio, said in an e-mail.
At 131 feet across, the Stena Primorsk is somewhat wider than other Hudson River-going vessels, said Ian Corcoran, vice president of the Hudson River Pilots Association.
“I haven’t spoken to the pilot yet, but if the ship loses the ability to steer, the width doesn’t really matter,” Corcoran said. He called it an unfortunate coincidence that the first tanker shipload of Bakken from Albany ran aground.
Buckeye Partners LP said in October it reached a multi-year agreement with Irving to provide crude services at its Albany terminal. Buckeye has 1.8 million barrels of storage there, and is making modifications to increase its rail capacity to 135,000 barrels a day.
Hendrick said Buckeye and another terminal run by Global Partners LP receive more than one unit train a day of crude from North Dakota at the port.
Spokesmen from Irving and Buckeye didn’t respond to an e-mailed request for comment.