Over a dozen companies are vying to develop oil terminals able to fully load supertankers along the US Gulf Coast even after a decision by one of North America’s largest pipeline operators to push ahead with its project.
More than 10 projects have been proposed for terminals over the span of a year that will be able to pack more than a combined 8 million barrels a day of oil onto very large crude carriers, or VLCCs, mainly off the Texas coast. But, not all may be needed.
Enterprise Products Partners LP was the first to announce a final investment decision late last month to proceed with its VLCC terminal. But, that didn’t stop Energy Transfer LP from saying just last week it was advancing talks to build a terminal or Tallgrass Energy LP from holding discussions with several counter-parties over its own project.
Supermajor Chevron Corp signed long-term agreements in support of Enterprise’s Sea Port Oil Terminal and Enterprise said this week it expects to receive regulatory approval in the first half of next year, followed by a two-year construction period.
Race Still On
“I’d say the race is still on,” said Kurt Barrow, vice president of oil markets, midstream and downstream energy at IHS Markit. “Just because one company pulls ahead earlier in the race, doesn’t mean that they will be the first one over the finish line.”
The new terminals should help propel US crude exports to fresh records as oil continues to flow from American shale patches. Domestic output is forecast to average 13.3 million barrels a day next year, according to the US government, about a million barrels higher than this year’s estimated average. The ports, combined with new pipeline systems, will also help ease bottlenecks that have caused Permian Basin crude to pile up with very few outlets.
“Of the 10 or so projects that have been announced, not all would be completed, simply because they aren’t needed,” said Sandy Fielden, director of research for Morningstar Inc.
Yet, a handful may still be necessary as the Louisiana Offshore Oil Port, or LOOP, is currently the only export facility in the US that can completely fill up these mega-tankers, to ship barrels around the world.
LOOP may not play an important role in US crude exports in the long-term, especially if facilities are built in Texas where production zones lie, said John Coleman, an analyst at consultancy Wood Mackenzie.
It’s not so easy to complete projects. Several have already faced regulatory hurdles this year. The US Coast Guard and Maritime Administration suspended the review process for both Enbridge Inc’s and Enterprise’s port applications. Officials also delayed the review process for Trafigura Group Ltd’s Texas Gulf Terminals.
Jupiter Energy Group pushed the start-up of its terminal, which is backed by private equity firm Apollo Global Management, by a year because it hasn’t secured base shippers or approvals from the Port of Brownsville, according to Jupiter Energy Group CEO Tom Ramsey.
Only five projects are in the permitting process — those planned by Enterprise, Enbridge/Oiltanking, Trafigura, Phillips 66 and Sentinel Energy Services Inc, according to the Maritime Administration.
Sufficient export infrastructure must be built along the Texas Gulf Coast, said a Texas Gulf Terminals representative.
A Phillips 66 spokesman said the company’s plans have not changed, a Flint Hills Resources LLC spokesman said it continues to advance its project and Port of Corpus Christi officials were not immediately available for comment.
“In our view, there is not going to be one winner in this race. There is room in this market to support two to three total VLCC terminals and that won’t include LOOP,” said Coleman.