Houston Chronicle by Jordan Blum Aug. 16, 2019
A glut of oil is headed to the Gulf Coast in the months and years ahead, triggering a race among a growing number of entrants to build deepwater crude export terminals in the Gulf of Mexico to ship most of that oil to foreign markets.
Companies have proposed at least eight offshore oil-export terminals — many requiring billions of dollars in investment — that would stretch from off the coast of Brownsville to southeastern Louisiana and take advantage of a new flood of crude from the booming Permian Basin as several pipelines connecting West Texas and the Gulf Cast near completion. Two key factors are driving the rush to build offshore terminals: All that oil has to go somewhere, and increasingly crowded ports in Houston and Corpus Christi can’t efficiently load the biggest supertankers.
“The congestion is shifting from the Permian Basin to the Gulf Coast,†said Sandy Fielden, director of oil and products research at the investment research firm Morningstar. “There’s lots of traffic that these offshore terminals can sort of bypass.â€
The growing Gulf glutEnergy analysts expect only two or three of the eight proposals to get built, but the long list of potential projects is a response to the limitations of Gulf Coast ports, which aren’t deep enough to completely fill the world’s largest crude tankers.
The constraints are particularly exasperating for Corpus Christi, which has pipelines from the Permian coming online now through early next year, carrying up to 2.5 million barrels of additional crude per day. The Port of Corpus Christi has worked for years to acquire federal funding to deepen its channel while proposing an export terminal near Port Aransas. In the meantime, other parties have proposed deepwater terminals farther off the coast.
But these projects, which would require miles of underwater pipelines, are at least three years away from completion, slowed by environmental reviews and other issues, including the need to move cautiously since a pipeline or tanker accident could trigger a major Gulf oil spill. That translates into a short-term glut of Gulf Coast oil and distressed prices starting this year and worsening in 2020, Fielden said.
All of this proposed growth is the result of the shale oil boom in the Permian Basin. The Permian is producing close to 4.4 million barrels of oil per day — more than one-third of the nation’s record production — making it the most prolific oilfield in the world. At the beginning of this decade, the Permian wasn’t even producing 1 million barrels daily.
The Permian’s lighter grades of crude oil aren’t as compatible with the Gulf Coast refining system, which was configured years ago to process heavier crudes from South America, the Middle East and Africa. But Texas crude is desired internationally, especially in Asian markets, meaning that most of the Permian oil is and will continue to be shipped overseas.
Since Congress lifted the nation’s decades-old crude export ban at the end of 2015, crude exports have steadily risen to nearly 3 million barrels a day, shipped primarily from the Houston, Beaumont and Corpus Christi regions. Those export volumes could double within a few years.
More:
https://www.houstonchronicle.com/business/energy/article/The-race-to-build-offshere-oil-export-terminals-14307770.php
