Forties Supply Chain Winds Down Amid the Coronavirus Pandemic

oil
Blog May 12, 2020

Forties pipeline flow dropped significantly during March and April and into early May, according to a moving average of our Forties oil balance flow. Forties average flow in April was 12 percent lower year-on-year compared to 2019. At the same time, various other changes were visible in the supply chain in the last couple of weeks and months as the covid-19 pandemic disrupts the oil markets at every level. Along with the North Sea oil flowing through the pipe, clear changes are notable at Forties’ storage locations at Hound Point and Kinneil. We also monitor tanker (un)loading activity at Hound Point and Finnart. Moreover, increasing floating storage near Dunbar and Southwold is rapidly increasing. Along with real-time operational changes observed with proprietary infrared images at the 210,000 bpd Grangemouth refinery, a holistic view emerges, giving a unique insight to the daily changes in the supply chain during this pandemic.

Monthly Flow Lower During March and April

As Q1 2020 ended, we saw a significant drop in Forties pipeline flow (Figure 1). The flow dropped nearly 20 percent during March, compared to a relatively normal average of 377,000 bpd during February. The monthly oil balance continued to slide in April by another three percent and is on track to decline further in May. Compared to 2018 and 2019, the March and April flows were 12 to 15 percent lower year-over-year, while May flows were down roughly 25 percent year-over-year as of May 7. At Genscape, we provide daily flow data and show rolling seven-day averages during the month to signal intra-month trends.

Figure 1: Forties oil balance flow Source: Genscape
Figure 1: Forties oil balance flow. Source: Genscape

Hordes of Aframaxes Load and Anchor

Using Vesseltracker data, it became clear that where normally a steady amount of Very Large Crude Carriers (VLCCs) load at Hound Point and head for Asian countries, suddenly a sharp increase was observed in the number of smaller crude oil tankers. Aframaxes alone loaded approximately 3.58mn bbls of Forties crude between April 15 and April 30. The majority of those went for anchorage near Dunbar or Southwold shortly after. In early May, a total of four Aframaxes were anchored near Dunbar, and more are expected to join the line, according to our data.

Figure 2: Aframax advantage award loading at Hound Point on May 5. Source: Genscape
Figure 2: Aframax advantage award loading at Hound Point on May 5. Source: Genscape

At Finnart, where crude oil tankers deliver additional crude to supply Petronineos’ 210,000 bpd Grangemouth refinery, only a handful of tankers arrived between April 22 and early May, indicating a clear shift in the supply chain.

Grangemouth Refinery Run Cuts

Like many other refineries across the UK and mainland Europe, the Grangemouth refinery was forced to scale back, shutting down a number of units as result of the drop in demand caused by the covid-19 pandemic. Our proprietary infrared monitoring system was able to precisely report on the sequential shutdown of several units. At first, the smaller 35,000 bpd CDU shut March 17, followed by the slightly larger 65,000 bpd CDU on March 25 and finally the 45,000 bpd FCC shut April 8. The detailed and timely notification gave our customers real-time insight during this rapidly changing environment.

The Forties pipeline system has an oil processing capacity of 1.15mn bpd and flows from the Forties Unity platform to the Kinneil crude stabilization plant. From there, stabilized oil is delivered either directly to ship at Hound Point, to tank at Dalmeny or to the refinery at Grangemouth. At Genscape, we monitor several pumping stations and facilities including Kinneil, Grangemouth, Cruden Bay, and Netherley. The daily Forties Supply Hub report provides critical insight and daily developments on all key factors of this pipeline system, which is one of the main contributors to the Brent crude benchmark. To learn more about our services or to speak with an expert, please click here.