Vopak Terminal
Written by GFBC Productions Staff Refineries in the US have been hit hard by the recession, which cut demand for refined oil products, and the industry continues to struggle. As oil companies consider idling or shutting down refineries, the industry now confronts another challenge 80 miles off the coast of Florida: the expansion of the Borco oil terminal on the Island of Grand Bahama.
The terminal plans to add 6 million barrels of storage capacity by 2011, reports Reuters on ForexPros.com. Borco’s existing storage capacity already tops 20 million barrels, but primarily holds heavy fuel oil or crude oil; much of the crude oil held at Borco gets sent to the US for processing. The new storage capacity, on the other hand, is designed to hold light refined products such as gasoline, diesel, and heating oil.
Those 6 million barrels of refined fuel products could compete directly with US refiners. “If you’re on the East Coast, you better be ready for competition,” said Tim Day, the managing director of First Reserve Corp., one of the owners of the Borco terminal. “A light sweet refiner making gasoline on the East Coast could suffer long term.”
Already suffering refiners hardly need another cause for worry. Borco’s move surprised some because one of the long-term trends hurting refiners is shrinking fuel demand in the US, a trend that would also affect Borco’s efforts to sell refined oil products to the US market. If conservation efforts, such as those that have reduced demand for heating oil, continue or increase, Borco and US refiners could be competing for shares of an ever-smaller market.
