8 May 2020

Covid-19 lockdown: Oil demand dries up, backlog of tankers at Marsden Point

7:03 pm on 8 May 2020

A drop in demand for oil during lockdown has created a backlog of oil tankers at Marsden Point near Whangārei.

Tanker unloading at Marsden Point Oil Refinery in 2013.

Tanker unloading at Marsden Point Oil Refinery in 2013. Photo: Rafael Ben-Ari/Chameleons Eye/ 123RF

The ships are waiting to drain their massive tanks of crude oil but as storage reaches capacity and consumption grinds to a halt, Whangārei Harbour Master Jim Lyle said the huge ships might be waiting for a while.

"At the moment, we have four tankers waiting at anchor and another two or three due, which is unusual. Basically, the refinery storage is pretty full and they still have crude oil coming in," Lyle said.

"They're having to find somewhere to process goods from the refinery as well, so a lot of the tankers are tied up either with product they can't unload or they're loading up product they're storing for the refinery."

He said it was not unusual for tankers to wait to be unloaded, but with a major drop in demand for fuel around the country, the wait might be longer than the refinery and the shipping companies were used to.

"Normally it would be a few days, sometimes a week, now we're getting requests to anchor for up to three months," Lyle said.

"So we put conditions around the anchoring and we give them a lot of advice and instructions and an outline of that would be if a storm was coming through, we'd request they'd move off the coast well out to sea and steamed up and down until the storm had gone through."

It's not only cars and trucks on our roads which aren't using petrol and diesel like they used to, Marsden Point has a pipe which sends aviation fuel directly to storage tanks near Auckland Airport.

And another big customer - cruiseships, are also no longer visiting our shores.

Lyle said it seemed that storage around the country for excess fuel was full and the coastal tankers which took refined product from Marsden Point and distributed it were affected as well.

"Some of the crude would have been ordered quite a while ago, and they've turned up and aren't able to discharge just because the refinery can't take them, but the general theme is that there's no fuel or not much fuel being used in New Zealand so it's difficult to get rid of it, so the storage tanks around the country are full and the coastal tankers are laid up more or less."

In a statement to Checkpoint, the New Zealand Refining Company - which owns Marsden Point - said the refinery was operating in a reduced mode due to the travel and transport restrictions and as such, they were refining much lower volumes of crude.

"The number of ships awaiting discharge varies according to production schedules under current reduced operations. We have used the same arrangements previously in times of reduced output, for example during maintenance in 2018.

"In this case, this mode of operation has been put in place in response to changes in customer requirements and also helps us maintain flexibility to respond quickly if demand recovers faster than anticipated."

Meanwhile, environmental group Greenpeace said the backlog at Marsden Point was a reflection of what was happening around the world as demand for oil had fallen through the floor.

Spokesperson Amanda Larsson said one of the big concerns was the risk of a major oil spill.

"There are hundreds of oil tankers dotted around the world's oceans at the moment, including right now off the coast of Whangārei.

"These tankers are really a ticking time bomb of potential oil spills and nobody wants to see oil washing up on New Zealand's beaches or causing wildlife to suffer any time soon."

Larsson said that an oil spill here was not unprecedented.

"Regardless of whether they're close to port or out at sea, we've had major oil spills off the New Zealand coast before and nobody wants another Rena disaster. Having these tankers off the New Zealand coast, but also around the world off numerous coasts, is a big risk.

"I think the question on many people's lips at the moment is why this stuff is being pulled out of the ground at all when nobody wants to buy it. I think the best storage solution for unwanted oil is to leave it in the ground."

Get the RNZ app

for ad-free news and current affairs