How Much More Can She Stand, Part 4 - Crude Export Volumes Key to Balancing Market

U.S. refinery demand for crude oil is off sharply due to COVID-related impacts on automobile and jet travel, and crude production is being slashed. Crude storage is filling up fast, both on land and on tankers at sea, and may be maxed out by June. That leaves imports and exports as the market-balancing agents, at least until demand for motor gasoline and jet fuel starts to rebound. And with significant volumes of imported heavy and medium crudes still needed by complex refineries, exports are likely to rise from their current, near-record levels this spring and summer. Longer term, though, we expect export volumes to decline, setting up a battle for barrels among export terminals. Today, we continue our series on Gulf Coast crude export terminals with a look at the three facilities in the Beaumont/Nederland area.

U.S. crude oil exports out of Gulf Coast terminals averaged 3.05 MMb/d in the first four-plus months of 2020, including 3.02 MMb/d in April and 2.94 MMb/d in the first week of May. In other words, the domestic and international market dislocations associated with the COVID pandemic so far have had a negligible impact on U.S. crude export volumes. That’s not to say that exports operate in a bubble — they certainly don’t. Instead, exports have simply continued to play their role as a market balancer, and that role in the earlier stages of the coronavirus era has involved sending out as much crude as possible into the global market. While that may keep export terminals busy in the near term, there are very real limits to how much the global market can take.

In Part 1 of this series, we looked at the Seaway Freeport and Seaway Texas City terminals, both of which are part of Enterprise Products Partners and Enbridge’s broader Seaway Crude Pipeline (SCP) system. We estimate Seaway Freeport’s export capacity at 200 Mb/d and Seaway Texas City’s at 300 Mb/d. In Part 2, we discussed the Houston Fuel Oil Terminal (HFOT), which is now owned by Energy Transfer, and the Seabrook Logistics Marine Terminal, which is jointly owned by Magellan Midstream Partners and LBT Tank Terminals. We estimate HFOT’s export capacity at 480 Mb/d, and Seabrook Logistics’ at 300 Mb/d. Then, in Part 3, we examined Enterprise Hydrocarbon Terminal, or EHT, which is one of the largest energy-related marine terminals on the Gulf Coast; it also is a major LPG export facility. EHT’s peak observed crude-loading capacity, on a monthly basis, is 600 Mb/d, according to RBN’s Crude Voyager, however, RBN’s crude export capacity model suggests the terminal’s capacity could be several hundred thousand barrels a day higher.

Today, we turn our attention to the three crude export terminals in the Beaumont/Nederland, TX, area, an hour’s drive east of the Houston Ship Channel. As a group, these facilities — Energy Transfer’s Nederland Terminal, Phillips 66’s Beaumont Terminal and Enterprise’s Beaumont Marine West Terminal — sent out an average of about 450 Mb/d in the first four months and one week of 2020, or about 15% of the Gulf Coast total.