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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with global oil and gas giant ConocoPhillips (NYSE:COP) (Houston, Texas) said last week that an oil export bottleneck may occur starting late next year on the Gulf Coast as more pipeline capacity grows out of the Permian Basin, but added they don't expect the bottleneck to last for long as export capacity increases.
Production in the Permian is rising to more than 3 million barrels per day (BBL/d) from about 1.5 million BBL/d four years ago, causing a bottleneck in outbound pipeline capacity that industry consultants expect to continue until late 2019. For more information, see June 30, 2018, article - Consultant: Lack of Permian Pipeline Capacity will Force Production Curtailments.
Pipeline companies are racing to complete projects to relieve that bottleneck, but some industry observers have questioned whether the pipeline buildout will only push the bottleneck to export facilities along the Gulf Coast.
Export relief may be on the way if some large terminal projects reach fruition.
Industrial Info is tracking Enterprise Products Partners LP's (NYSE:EPD) (Houston, Texas) planned $1.5 billion offshore crude oil loading terminal, to be located about 80 miles offshore from the Houston Ship Channel entryway. The export facility would be capable of loading and exporting crude oil at a rate of about 85,000 barrels per hour, and would be able to load Very Large Crude Carriers (VLCCs), which can hold 2 million barrels. Completion is planned for early 2020. For more information, see Industrial Info's project report.
Another offshore terminal is being planned about 30 miles from the Port of Corpus Christi, Texas. Trafigura AG's (Geneva, Switzerland) $1.5 billion crude export terminal also would be capable of loading and exporting crude oil at a rate of about 85,000 barrels per hour, with the ability to load VLCCs. This project could reach completion by late 2020. For more information, see Industrial Info's project report.
Speaking during ConocoPhillips' third-quarter earnings conference call on Thursday, Chief Financial Officer Donald Wallette Jr. said the Gulf Coast will require more export capacity.
Industrial Info is tracking $52.3 billion in project activity by ConocoPhillips across the globe, including nearly $23.8 billion worth in North America.
Click on the image at right for a graph showing ConocoPhillips' global project activity.
In Texas, he added: "There are plans in place in both Corpus (Christi) Ingleside and Houston to expand the export capability. And we think those plans are proceeding along at a good pace. Right now, we think the Corpus Ingleside area has about 800,000 barrels a day of export capacity. And recently in August, they exported about 400,000 barrels a day. So, right now, 50% of their capability."
Buckeye Partners LP (NYSE:BPL) (Houston, Texas) is developing an estimated $400 million crude oil terminal in Ingleside, which is a joint venture with Phillips 66 (NYSE:PSX) (Houston, Texas) and Andeavor (which is now merged with Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio)). It would include the construction of tanks and a pair of deepwater vessel docks capable of berthing VLCCs. Currently, only one existing facility on the U.S. Gulf Coast, the Louisiana Offshore Oil Port (LOOP) in Covington, Louisiana, can fully load a VLCC. For more information, see Industrial Info's project report.
"If you move up to Houston, we estimate about 1.6 million barrels a day of export capacity at the Port of Houston," Wallette said. "And August exports were 400,000 barrels a day, so a lot of surplus capacity in Houston."
Wallette also noted dredging and expansion plans by the Port of Corpus Christi to increase export capacity over 2 million barrels a day by late 2021 or 2022. Part of the port's 10-year capital investment program, the channel will be dredged from its current depth of 45-47 feet to 54 feet to accommodate Suezmax (those ships that can fit through the Suez Canal and carry up to 1 million barrels of oil) and larger vessels, and widened to 530 feet to allow for two-way traffic flows, positioning the port as the deepest draft navigation port in the U.S Gulf, according to the port authority. For more information, see Industrial Info's project report, and June 27, 2018, article - Corpus Christi Ship Channel Expansion Set to Start this Year.
"Just looking at the pipeline schedules, the new pipes being built out of the Permian to the Gulf Coast, it looks like those planned toward Corpus are probably going to go in first. And so we'll probably see a little bit of bottleneck at Corpus initially. But then once the pipes go in from the Permian to the Port of Houston, the ship channel comes on then that should alleviate the bottleneck," Wallette said.
He added, "We're probably talking about bottlenecks in terms of months rather than years."
ConocoPhillips reported third-quarter 2018 earnings of $1.9 billion, up from third-quarter 2017 earnings of $400 million.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Production in the Permian is rising to more than 3 million barrels per day (BBL/d) from about 1.5 million BBL/d four years ago, causing a bottleneck in outbound pipeline capacity that industry consultants expect to continue until late 2019. For more information, see June 30, 2018, article - Consultant: Lack of Permian Pipeline Capacity will Force Production Curtailments.
Pipeline companies are racing to complete projects to relieve that bottleneck, but some industry observers have questioned whether the pipeline buildout will only push the bottleneck to export facilities along the Gulf Coast.
Export relief may be on the way if some large terminal projects reach fruition.
Industrial Info is tracking Enterprise Products Partners LP's (NYSE:EPD) (Houston, Texas) planned $1.5 billion offshore crude oil loading terminal, to be located about 80 miles offshore from the Houston Ship Channel entryway. The export facility would be capable of loading and exporting crude oil at a rate of about 85,000 barrels per hour, and would be able to load Very Large Crude Carriers (VLCCs), which can hold 2 million barrels. Completion is planned for early 2020. For more information, see Industrial Info's project report.
Another offshore terminal is being planned about 30 miles from the Port of Corpus Christi, Texas. Trafigura AG's (Geneva, Switzerland) $1.5 billion crude export terminal also would be capable of loading and exporting crude oil at a rate of about 85,000 barrels per hour, with the ability to load VLCCs. This project could reach completion by late 2020. For more information, see Industrial Info's project report.
Speaking during ConocoPhillips' third-quarter earnings conference call on Thursday, Chief Financial Officer Donald Wallette Jr. said the Gulf Coast will require more export capacity.
Industrial Info is tracking $52.3 billion in project activity by ConocoPhillips across the globe, including nearly $23.8 billion worth in North America.
In Texas, he added: "There are plans in place in both Corpus (Christi) Ingleside and Houston to expand the export capability. And we think those plans are proceeding along at a good pace. Right now, we think the Corpus Ingleside area has about 800,000 barrels a day of export capacity. And recently in August, they exported about 400,000 barrels a day. So, right now, 50% of their capability."
Buckeye Partners LP (NYSE:BPL) (Houston, Texas) is developing an estimated $400 million crude oil terminal in Ingleside, which is a joint venture with Phillips 66 (NYSE:PSX) (Houston, Texas) and Andeavor (which is now merged with Marathon Petroleum Corporation (NYSE:MPC) (Findlay, Ohio)). It would include the construction of tanks and a pair of deepwater vessel docks capable of berthing VLCCs. Currently, only one existing facility on the U.S. Gulf Coast, the Louisiana Offshore Oil Port (LOOP) in Covington, Louisiana, can fully load a VLCC. For more information, see Industrial Info's project report.
"If you move up to Houston, we estimate about 1.6 million barrels a day of export capacity at the Port of Houston," Wallette said. "And August exports were 400,000 barrels a day, so a lot of surplus capacity in Houston."
Wallette also noted dredging and expansion plans by the Port of Corpus Christi to increase export capacity over 2 million barrels a day by late 2021 or 2022. Part of the port's 10-year capital investment program, the channel will be dredged from its current depth of 45-47 feet to 54 feet to accommodate Suezmax (those ships that can fit through the Suez Canal and carry up to 1 million barrels of oil) and larger vessels, and widened to 530 feet to allow for two-way traffic flows, positioning the port as the deepest draft navigation port in the U.S Gulf, according to the port authority. For more information, see Industrial Info's project report, and June 27, 2018, article - Corpus Christi Ship Channel Expansion Set to Start this Year.
"Just looking at the pipeline schedules, the new pipes being built out of the Permian to the Gulf Coast, it looks like those planned toward Corpus are probably going to go in first. And so we'll probably see a little bit of bottleneck at Corpus initially. But then once the pipes go in from the Permian to the Port of Houston, the ship channel comes on then that should alleviate the bottleneck," Wallette said.
He added, "We're probably talking about bottlenecks in terms of months rather than years."
ConocoPhillips reported third-quarter 2018 earnings of $1.9 billion, up from third-quarter 2017 earnings of $400 million.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
