Dozens of oil tankers cluster off the coast of Texas due to oil price fall | Hacker News Reader

Dozens of oil tankers cluster off the coast of Texas due to oil price fall

marinetraffic.com

142 pointscryoshon80 comments

Can i just say thanks for sharing this map. I'm having a blast looking around the world at various ports!

Edit: My favourite so far is a oil rig who's description photo is them on fire: http://imgur.com/9VpE78V

The density map is also fascinating. You can make out the offshore wind fields in the north sea.

It's also interesting to see how busy the waterways in / around the North Sea / European west coast are compared to the US. But then, the US is a large landmass and probably has a lot more ground transport (e.g. trains)

IIRC, most stuff gets around the US on 18-wheelers using highways. (Train infrastructure in the US is laughably terrible.)

That's not the case, freight trains in the USA are excellent.

European railways prioritise passengers, but much freight moves by water.

Most stuff does indeed get around the US by truck:

http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/pub...

I've also heard our freight rail infrastructure described as excellent through, so maybe if you compared it to other countries in cost per ton/mile it would come out well.

It really depends on what you're transporting.

If you want to move 100 tank cars of crude oil, or 100 cars of coal, then a freight train will accomplish that pretty easily. You can even move a truck trailer via rail, that's called intermodal.

But if you want to deliver 50,000 pounds of freight across the country in three days, you can't do it by rail. You pay a tractor trailer "team" (e.g. often a husband and wife)* to pick up your load on the West Coast on Thursday and deliver it on the East Coast on Monday. They'll take turns driving all weekend to accomplish that.

Bulk stuff moves by train or barge, relatively heavy relatively time sensitive stuff moves by truck, light and time sensitive stuff moves by air.

*Edit: that sounds complicated or risky, but it's not. Manufacturers use logistics companies to handle these details. Logistics companies are also good at quickly moving LTL (less-than-truckload) loads across long distances by consolidating multiple shipments into one trailer.

Those waterways fill the same sort of role that barges on the Mississippi fill in the US.

Wow, China's coast is impressive!

I don't think it is on fire, look more like they are just flaring stuff.

Offshore and relatively remote crude rigs commonly flare off natural gas because of the cost involved in attaching them to collection pipelines (and infeasibility of condensing it to LNG). That is why the Bakken fields can be seen from space at night: http://www.ceres.org/industry-initiatives/oil-and-gas/gas-fl...

What I always wonder: why flare it off instead of using the gas to provide for electricity and heat for local usage?

Excessive amounts past what is needed for local heat and electricity. North Dakota did recently pass legislation requiring more efficient/environmentally friendly storage/processing/usage of natural gas that would've previously been flared, regardless of how economically viable it is.

EDIT: I'm mistaken. North Dakota gave the industry an extra 10 months to meet these requirements.

http://www.reuters.com/article/2015/09/24/us-north-dakota-fl...

> Governor Jack Dalrymple and the two other members of the North Dakota Industrial Commission (NDIC) voted unanimously to change the date when companies must capture 85 percent of natural gas produced from their wells to Nov. 1, 2016.

Classy North Dakota.

This is a drill rig and does not have any oil/gas production facilities. The pressure in a well can be very unpredictable and is very dangerous to connect directly to generators/heaters. I's much safer to flare it off for the short period when plugging the well.

Because it's a massive safety risk, and believe it or not, the cost is not with doing that. There is a lot of the gas. You must control it.

Methane is heavier than air and it will pool down and make a potential FOOOOM!!! event. Unscheduled release of energy bad. Asphyxiation by methane bad. There's no odorant and you can't smell it.

Methane is lighter than air.

Nat. Gas may or may not be just methane. You are absolutely correct for what's called "dry gas".

It can be controlled though, you just need to be willing to pay for the infrastructure to do so.

Agreed. I'd love to see it myself.

No, it was definitely a fire: http://www.naroomanewsonline.com.au/story/1345250/ship-spott...

Definitely a fire, yes, but also definitely an intentional one. Look at the images others have posted in the thread: http://imgur.com/FTFgz5U. It has a flare at platform level sticking out one side.

My bad then. That caption on the article I linked is pretty misleading.

Oil rigs have specially designed flare stacks, so you won't really see flare fires right on the deck like that.

http://photorator.com/photos/images/north-sea-oil-rig-flarin...

It's definitely flaring. Just look at the other images. Due to the way the flare is placed it just looks like it's on fire. It's still an emergency flare and looks like a pretty bad situation. I've worked on similar drill rigs and i would not want to be on one that is flaring that much.

http://imgur.com/FTFgz5U

http://www.marinetraffic.com/en/ais/details/ships/shipid:185...

I live in a small town in southeast Alaska, where there's only a few small yachts; most boats in the harbors are either fishing boats or small boats for personal use. There's one yacht in the harbor next to the school I teach at.

I clicked on a random icon near Seattle, and it was the one yacht I see every day on my walk to school:

http://www.marinetraffic.com/en/photos/of/ships/shipid:45556...

Another southeasterner!

I just watched a tug come around an island in the app, then saw it out my window irl. Very cool!

I work with a lot of fishing vessels in the Gulf and Bering Sea; it is very cool to see a picture of the boat and get an idea of where they are hanging out.

Wow, I just looked at your website and I'd love to get in touch. I studied physics in undergrad but went into teaching and now I'm spending more time programming.

I'd love to chat about a landslide-prediction model I've been toying around with. I'll send you an email in a moment.

And a reminder that we're not the only ones looking at the website: I found a few ships with the destination listed as 'ARMED GUARDS ONBOARD'

http://imgur.com/CRbS9nD

edit: It looks like the website either hides the locations of ships off the Somalia/Yemen coast, or the ships can choose to turn off their transponders there.

Most likely the captain choosing to turn it off. If you look at Coast Guard & Pilot boats they'll usually leave it on as they leave the dock and make their way out. Then it's off. Not very effective at interdiction if you're broadcasting your location.

This site seems pretty awesome. Although on my second click to it it says I already have a notification? I don't even have an account!

Turn on the density maps and zoom out. It is awesome to see commonly used shipping lanes light up.

Zero Hedge had a good piece on this yesterday and goes a bit into contango, where future prices are higher than spot prices, essentially incentivizing these tankers to just sit in the water.

http://www.zerohedge.com/news/2015-11-12/something-very-stra...

what I don't get is that if there are future contracts, they have to be fulfilled when the time comes, wasn't all this oil bought in advance with future contracts? I guess actual users of the oil have actually ordered it before as opposed to speculators, they need it now don't they?

Buy spot price, sell a future immediately. Works if the storage cost (i.e. keeping the ship & crew out of port) is greater than the spread.

One of my favorite board games is Container[1].

The game is great because the economy develops with each player taking on different levels of responsibility in different roles: production, storage, and shipment.

And it's not at all uncommon to watch players keep fully-loaded ships at sea while they wait for the opportune time to sell the goods on board.

[1]http://boardgamegeek.com/boardgame/26990/container

thanks for this, didn't know it existed!

It's amazing, but at the same time it's OOP with a reprint anytime soon being unlikely. It would probably be very easy to rig up a print-and-play copy however.

ebay here I come!

Not likely to have success there, either, but here's a list of sellers.

https://boardgamegeek.com/geekmarket/browse?objecttype=thing...

Where can I find this for less than $150?

https://boardgamegeek.com/thread/1338344/where-can-i-find-le...

http://www.zerohedge.com/news/2015-11-12/something-very-stra...

http://www.nytimes.com/2015/11/12/business/oil-tanker-traffi...

And here I was expecting a news article or press statement! It was an incredibly pleasant experience to see the facts from the headline firsthand, no spin attached. Thank you, OP!

What does the normal level of tankers idling outside of Galveston look like?

It does seem that that would be the pertinent question.

If you look at the density map layer option, you can crossfade between 2013 and 2014. I didn't sign up for an account, but it looks like in 2014 at least they saw an increase in traffic where the tankers are now parked.

But, last year there was also significantly more traffic through that port in general, so it may not be that the percentage of temporarily held ships as a function of total traffic changed?

(There's also a lot more energy products coming out of that region now, hence more vessels.)

This sort of phenomenon can be seen lots of times throughout the past decades. Anytime oil falls below a certain price, it becomes cheaper to pay to keep the ships running offshore under the assumption that oil prices will increase in the near term.

It's called "Contango".

http://www.bloombergview.com/articles/2015-03-31/how-oil-mar...

Makes sense to me, why the downvotes? Maybe missing some references to back up his claim?

Here is another port where oil tankers often wait when oil prices are low: http://www.marinetraffic.com/en/ais/home/centerx:57/centery:...

I had the opportunity to go on board one of these ships in 2012 and here is a picture I took during that visit: http://imgur.com/hmM60h4

So am I right thinking these ships are fully loaded?

If so, I guess the implicit assumption is that the price will rise back faster than the costs of having an idle ship sitting in the water? If the market was efficient, wouldn't it be irrational for the holders to assume this?

i don't think you fully appreciate how cheap (relatively) boats are, it's why trade between the US and China works even for the cheapest of goods.

This is a great point. Operating a tanker ship might appear expensive (hundreds of thousands per day), but when you spread that cost across the cargo it holds, it's actually pretty cheap.

I remember hearing that shipping something from China to the US can be under $1 per pound.

I think $1/pound is too high.

The Shanghai Containerized Freight Index (SCFI) has it at $1102 to ship a forty-foot container (FEU) from China to the US west coast [1]. A 40' container has a 61,200 lb payload capacity [2]. That's 1.8 cents/pound. How close the cost gets to this depends on the payload density, but $1/pound seems high.

[1] http://www1.chineseshipping.com.cn/en/indices/scfinew.jsp [2] http://www.dsv.com/sea-freight/sea-container-description/dry...

I didn't know the exact number that's why I put "less than $1/pound".

You are correct though. If you look at some of the products like fruit that we get from Asian, the cost per pound would have to be pennies or else they couldn't charge $2/pound for the produce in the US.

According to the recent earnings report from North American Tanker [0], their cost per day is $12K, while they charge $35K/day on the spot market. This is for their Suezmax, which can hold 1M barrels of crude.

[0]Warning PDF:http://hugin.info/201/R/1966091/717954.pdf

If suppliers don't want to trade at current prices, the ship is going to be sitting idle somewhere - and it's more profitable to sit idle near America while full than to sit idle in the Gulf of Oman while empty.

The alternative would be land-based storage tanks. They also cost money.

This happens sometimes. Example: http://www.telegraph.co.uk/motoring/news/6601779/Oil-tankers...

The market is efficient, but only on the long run. People making decisions like this make the market efficient by storing oil when it is cheap (or when it appears to be cheap).

I fail to see how deliberately not doing something with a resource makes anything more efficient.

"Efficient" has a very specific meaning in this case.

https://en.wikipedia.org/wiki/Efficient-market_hypothesis

It's obvious that moving oil in space helps, right? You move the resource from a place it's relatively plentiful to a different place where oil is relatively scarce. Say, from the Persian Gulf to Australia.

The same thing is happening here:

These ships are trying to move oil from a time when oil is relatively plentiful to a time when it's relatively scarce. It's riskier, but if they succeed, everybody wins: they make money, and they do it by lessening that future scarcity.

Often ships sit loaded for months on end (sometimes due to customs or duties / ownership issues). There's also a proximity issue. If a loaded ship is sitting close to the states but in international waters, it's easier to get the load back into the states. If you leave the cargo in a storage facility somewhere you still have to pay for the storage, and in addition the transit + time when you actually want to use/sell/offload it.

Thanks for this link! I'm in Amsterdam, and I really wish I knew about this web site during Sail from August 19-23! It happens every four years. It would have been a great way to identify all the ships we saw, especially when they were all moored in the IJ during the fireworks. Is there any way to replay historic information? https://vimeo.com/141042923

During the oil 'crisis' in the 70's, when there were long lines of cars at the gas stations, my dad remembers seeing fully loaded tankers stacked up at Tampa for a long period of time. The speculation ranged from (a) the president wanted to use the crisis to drive a different energy policy, to (b) the oil companies were waiting to offload as the price kept climbing.

I wonder if all those tankers next to Fujairah are indicating the same thing. http://www.marinetraffic.com/en/ais/home/centerx:56/centery:...

Looks like same near Netherlands: http://www.marinetraffic.com/en/ais/home/centerx:3/centery:5...

Yeah, there's also 50% of the US' refining capacity along the Gulf Coast, as well as a massive new surge of crude and therefore products in the area. They simply can't get enough dockspace or pipeline takeaway capacity to make a meaningful dent.

It's also cool to see the clusters waiting each side of the Panama Canal

Wow. I'm talking about the webpage.

So is the risk of an tsunami so low there that it is considered safe to have fully loaded oiltankers idle off the coast, or would this be not a problem for those tankers?

I think tsunamis are much lower over deep water.

A tsunami is harmless on the ocean. It is only manifesting itself when coming into shallow waters.

Might be more at risk from a freak wave than a tsunami - but still v.unlikely - bet they are insured

And the companies who own them are completely legally insulated from any risk

Source: I watched West Wing

The risk near Galveston would be primarily from hurricanes.

The way tsunamis affect different locations is quite interesting! The wave length (distance between two peaks/troughs) at sea can be hundreds of kilometers long, a tsunami could pass under your tiny boat while out at sea and you wouldn't even notice it. It's only as they approach land that the shallow depths force the wavelength to shorten, forming the giant waves we usually associate with tsunamis.

[1] http://www2.scholastic.com/content/images/articles/sn_ts/sn_...

[2] https://en.wikipedia.org/wiki/Tsunami

So i looked at this map http://www.charts.noaa.gov/OnLineViewer/11323.shtml and the water depth seems to be about 60 feet if i'm doing it right, i don't know if this is considered safe in such cases or how long they would take to reach a safe depth. Guess it just makes me uncomfortable to have them idle there fully loaded to make a better buck.

I don't think there's ever been a Tsunami in Galveston Bay. Now hurricanes... Like another poster said, they're safer out there than closer in, and having them inside the actual Galveston bay would be incredibly dangerous due to congestion.

About 66 million years ago there was probably quite the Tsunami in Galveston Bay. Courtesy of the Chicxulub impactor.

But you might be right, I'm not really sure what the landmasses looked like so long ago. Also I don't think the place was actually named "Galveston Bay" at the time. :)

For big ships, idling off the coast is exactly where you want them during inclement weather. They're big enough that waves aren't really an issue - it's getting battered against land that's the problem.

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