ANS discount set to widen

OREANDA-NEWS. July 21, 2015. Alaskan North Slope (ANS) crude in August trade reached the narrowest discount to calendar month average (CMA) Ice Brent since October 2013, but the discount is likely to widen this fall after Alyeska Pipeline Service Company completes planned maintenance on the Trans-Alaska Pipeline System (TAPS).

The grade's discount to CMA Ice Brent averaged 31?/bl during August trade, up from an average discount of \\$1.40/bl during July trade.

A total of 1.55mn bl of spot ANS sold for delivery to the US west coast in August, the smallest monthly total spot volume since at least October 2012. A total of 2.7mn bl of spot ANS sold for July delivery.

Alyeska Pipeline Service, operator of TAPS, has scheduled three short shutdowns in the second half of 2015 and one shutdown for major maintenance. The company performed one short shutdown in April and one shutdown for major maintenance in June.

ANS production averaged 463,289 b/d in June and has averaged 464,332 b/d in July to-date, far below the average of 513,915 b/d during the first half of 2015.

The narrow ANS discount has prompted mainland Padd 5 refiners to take their first Russian crude since October 2014. Charterers have fixed at least three Aframax cargoes this month to ship crude from the Port of Kozmino, Russia, to the US west coast in late July, while cargoes are due to arrive in Hawaii at the end of the month from Kozmino and Yeosu, South Korea.

But the arbitrage for Russian crude to the US west coast will likely close as ANS production returns to normal levels following summer maintenance and its discount to Brent widens.

Tesoro in October 2014 took 223,000 bl of Russian crude at its 120,000 b/d refinery in Anacortes, Washington, and 490,000 bl at its 72,000 b/d refinery in Kenai, Alaska.

Padd 5 refiners took 2.628mn bl of Russian crude in July 2014 as the ANS discount narrowed to 73?/bl.

ANS production fell to 420,421 b/d in July 2014 and 414,169 b/d in August, far below the 2014 average of 514,421 b/d.