BOSTCO October start expected; will ease Houston Ship Channel congestion: trade

Houston (Platts)--22Jul2013/505 pm EDT/2105 GMT


The Battleground Oil Specialty Terminal on the Houston Ship Channel will start operations in October with 2.84 million barrels of residual fuel oil and feedstock storage, about 40% of its earlier-announced 7.1 million-barrel capacity, sources close to the project and Gulf Coast fuel oil traders say.

BOSTCO operator Kinder Morgan had previously said the terminal would start operations at its full capacity in the third quarter of this year. Kinder Morgan owns 55.5% in BOSTCO, while TransMontaigne has a 42.5% share and John McDonald, the founder of the project has 2%.

Another 3.36 million barrels of fuel oil and feedstock storage at BOSTCO is expected to come into service between the end of this year and the first quarter 2014. The company is also expected to add 900,000 barrels of diesel storage capacity in Q4 2014.

BOSTCO is fully subscribed, with the total 6.62 million barrels of resid and feedstock storage taken by Valero, Unipec USA, Glencore and Tauber and four other unidentified companies, sources said. The distillates storage has been fully subscribed by Morgan Stanley, the said.

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Fuel oil blenders along the ship channel are eagerly awaiting BOSTCO's completion, which they say will open up more dock space and ease loading delays and costs.

"BOSTCO will help to reduce the demurrage we currently pay for loading delays out at ship channel terminals," said trader whose company has operations in the ship channel. "The beauty about BOSTCO is the amount of available dock space."

The BOSTCO terminal will offer two ship docks and three barge docks. The ship dock will be able to accommodate ships with a beam of 168 feet and draft of 45 feet and displacement tonnage of 205,000 mt. The barge docks can load a total of 12 barges each having a maximum length of 300 feet and a draft of 12 feet, according the company's website.

Currently demurrage in the Houston Ship Channel ranges from one day to three days on average, according to a Platts survey of blenders. "Today the market is quiet, so the time taken to bring in or load a vessel is less but when the market is active, I have seen demurrage up to 10 days even," said another trader.

The largest of the fuel oil terminal in the Houston Ship Channel is the Houston Fuel Oil Terminal, with 11.6 million barrels capacity. HOFTI is adding another 1.3 million barrels. The next largest the Intercontinental Terminals Co. facility, with 12.78 million barrels. It handles refined products including fuel oil.

--Esa Ramasamy, esa.ramasamy@platts.com
--Edited by Richard Rubin, richard.rubin@platts.com

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