This pipeline runs through Chiriqui and connects the Caribbean to the Pacific ports. Eventually we may see a refinery here in Panama that will reawaken a sleepy banana plantation town plagued by unemployment since Chiquita pulled out.
BP Products North America Inc. will ship some 100,000 barrels per day from east to west under agreement with Petroterminal de Panama (PTP). BP will provide oil to customers in the West Coast of the United States.
The press release of PennEnergy says,
BP Begins Shipping Crude Oil Along Trans-Panama Pipeline
February 6, 2012 [PennEnergy] – BP Products North America Inc. announced today that it has started shipping crude oil bound for the U.S. West Coast through Petroterminal de Panama (PTP)’s trans-Panama pipeline, marking the start of a seven-year transportation and storage agreement between BP and PTP.
Under the terms of the agreement, BP has leased a total of 5.4 million barrels of PTP’s storage located on the Caribbean and Pacific coasts of Panama and committed to east-to-west crude oil shipments averaging 100,000 barrels per day through PTP’s trans-Panama pipeline.
Crude oil tankers too large to navigate the Panama Canal sail around Cape Horn in South America to reach the US West Coast. Under the new agreement, BP-chartered Very Large Crude Carriers (VLCCs) can now sail to the Caribbean port of Chiriqui Grande where the oil will be stored and piped to the Pacific coast port of Charco Azul and loaded on tankers bound for the West Coast.
The presence of onshore storage on the Panamanian coasts also provides for crude oil blending and optimized cargo volume and delivery window to meet individual refiners’ needs. For example, BP’s dedicated crude oil storage at these ports can help West Coast refineries reduce demurrage costs associated with having VLCCs waiting in port for prolonged periods while discharging crude into limited tankage.
“BP’s ability to utilize new dedicated tankage at terminals on both coasts and the reversed pipeline will provide U.S. West Coast refiners with more diverse and flexible supply options, and also grow our business in Latin America. This overland route greatly reduces transit times and lowers freight costs for many of our customers,” said Paul Reed, chief executive of BP’s integrated supply and trading organization at a commissioning ceremony today in Panama City. “This is also good news for Panama. It creates new jobs on both coasts of the pipeline bringing increased prosperity to the region.”
Today’s ceremony was also attended by representatives of the Panamanian government, and senior executives from BP, PTP, Northville Industries, who are the managing partner of PTP, and other local businesses.
Source: TankTerminals.com
It is my humble opinion that the government of Panama will not be able to attract a serious and credible entity to develope a green-field refinery project in Panama. I come from the industry and have consulted on numerous attempts to attract a refinery here.
Outside of the fact that the economics just are not there for a refinery, the government, and in particular this Administration, lacks the qualified personel in the Secretary of Energy’s office and at MICI to comprehend the dynamics of the global oil & gas industry, moreover understand what’s neccessary to attract a credible entity to this market.
Issues past project developers have run into include:
1. Lack of local, regional crude supply at competitive prices; what BP and Tesorso run through the PTP line is West African crude, i.e. expensive Brent-indexed crude. Most is delivered to their refineries on the US West Coast and Hawaii for blending with heavier crudes.
2. PTP line is NOT continuous flow like everyone thinks. One cannot place a unit nearby to process and put the bottom of the barrel back into the pipeline for re-export.
3. No presence of natural gas to fire the burners in the refineries heaters.
4. No local, qualified and even remotely skilled labor; all labor would need to be imported – has been and will be an enormous political issue to overcome; proposed solution to use past REFPAN employees is not much of a solution as skill transfer set not as present as most would believe, and new developers are aware of labor union problems leading to closure of REFPAN – there has been a strong sentiment to avoid past REFPAN employees
5. Can not compete with current importers and traders in Panamanian market and Central American market without temp. protectionary tariffs from government; no political will to do so.
6. Current product market demand specs are for low quality, questionable margin fuels; no incentive to provide cleaner burning fuels
7. Not large enough market for most credible entities, with financial capacity to entertain a project of this size, to be interested.
8. Juega Vivo culture among locals and some politicians; everyone has their hand out; players in this industry just don’t waste their time with that BS, especially in such a small market, i.e. part of reason for Qatar and Oxy pullout in past
9. It is a capital-intensive industry; these projects are difficult everywhere; what’s the big upside to Panama that the rest of the world doesn’t know about.
In summary, I think the best advice would be: “if you get your sh*t together, it may come.”