US Grain Shippers Begin To Stand Down From Oil Spill Threat

21st Jun 2010 19:32

By Gary Wulf Of DOW JONES NEWSWIRES A crisis mentality that has gripped the Gulf shipping industry since BP PLC's (BP, BP.LN) leased Deepwater Horizon drilling platform exploded and sank into the Gulf of Mexico in April has finally begun to wane, as the flow of crude from the ruined rig begins to be gradually pinched off. While still representing one of the largest oil spills in U.S. history, at an estimated 125 million gallons, Port of New Orleans spokesman Chris Bonura said the local transportation industry has begun to "stand down." Rates for shipping grain have also declined as the threat to shipping dissipates. "There have only been three or four [ship] cleanings and no port closures, so there is a lot less interest" in the oil spill, he said. "Plus, the slick has moved farther north and east" away from the mouth of the Mississippi River, which is the gateway for some 60% of all U.S. grain exports annually. Even ports in the eastern Gulf have been virtually unaffected by the spill, though crude oil from the leaking well began to arrive on local shores last week. "The Port of Mobile remains open to commercial traffic with no anticipated closures or delays associated with the Deepwater Horizon oil spill," said the latest press statement from the nation's ninth-largest port. "Plans are in place to handle ships in the event heavy oil hits our channel." No more than light concentrations of oil are forecast to approach the Alabama coast this week though, according to forecasts issued late Sunday by the National Oceanic and Atmospheric Administration. The reduced threat has even prompted the agency to discontinue some of the daily projections it has been making regarding future movement of the oil slick. "The offshore forecast has been temporarily stopped, due to small amounts of oil offshore, the absence of recent observations confirming significant amounts of oil in offshore areas, and the large separation between the Loop Current complex and the oil slick," NOAA said Sunday. "Forecasts will resume if the threat returns." It was once feared that the oil slick could ride that so-called "Loop Current" out of the Gulf and up the Eastern Seaboard, threatening ocean shipping as far away as North Carolina. Gulf freight rates have also waned, commensurate with the reduced threat to shipping. A grain transportation report issued Thursday by the U.S. Department of Agriculture noted the cost of shipping grain from the U.S. Gulf to Japan currently averages $68.50 per metric ton, which is down 2% from levels seen when the oil spill began April 20. BP is capturing a lot of the oil now, Bonura said, citing reports that the company has already stemmed half of the oil flow and may soon capture as much as 90%, utilizing improved technology to siphon crude from the well to waiting surface ships. Iowa State University grain marketing specialist Chad Hart estimated that Gulf grain prices could well have fallen 10-50 cents per bushel, if the oil spill had caused significant disruptions in U.S. grain exports. -By Gary Wulf, Dow Jones Newswires; [email protected] (END) Dow Jones Newswires June 21, 2010 14:32 ET (18:32 GMT)