BP begins shipping crude oil for US West Coast through transPanama Pipeline

3 February 2012

BP Products North America Inc. has started shipping crude oil bound for the US 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.

The 81-mile long Trans-Panama Pipeline was built in 1982, originally to transport crude oil shipments from Alaska’s North Slope to refineries in the Caribbean and the US Gulf Coast. The pipe has a diameter of 40 inches from Charco Azul to Caldera Station, and there changes to a 36 inch diameter up the scraper trap at Chiriqui Grande. The pipe is buried four feet underground except on areas where it is placed over structures.

In order to transfer crude oil, there are two main Pumping Stations with 8 centrifuge electric motor pumps (4 each) of 5,000 hp each. Pumping Station A (PSA) is located at kilometer 130 of the Pipeline on a Hill 3.5 kilometers from the Atlantic Littoral and an elevation of 250 meters above sea level; Pumping Station B (PSB) is located at kilometer 114 of the pipeline at the continental division between the Provinces of Chiriqui and Bocas del Toro.

The pipeline was shut down in 1996 as Alaska crude shipments declined and reopened in 2003 to transport Ecuadorian crude to the Gulf Coast.

In May of 2008, BP and PTP entered into an agreement in which PTP committed to reverse the pipeline and BP committed to lease storage and ship crude oils from the Atlantic basin along the pipeline. In August 2009, PTP completed the reversal of the pipeline. Its current capacity is 600,000 barrels per day.