How Much More Can She Stand, Part 8 - Ingleside's Quick Rise to Crude Exports Prominence

Since the long-standing ban on most exports of U.S. crude oil was lifted more than five years ago, major ports and marine terminals along the Gulf Coast have been competing fiercely for the business of crude shippers. The primary weapons in this battle for barrels have been the abilities to provide easy pipeline access to the Permian and other key production basins, ample storage near the water for blending and staging, and top-notch dock facilities for quickly, efficiently loading crude onto tankers, the bigger the better. On that last point, for many shippers the vessel of choice is a 2-MMbbl VLCC, which typically offers the lowest per-barrel cost for long-distance oil delivery. Crude-laden VLCCs are “low riders” that need deep water, though, and so far only the Louisiana Offshore Oil Port can fully load one. Within a year, though, thanks to a long-awaited Corpus Christi Ship Channel dredging project now under way, marine terminals in Ingleside, TX, will be able to do the next-best thing: loading up to 1.6 MMbbl onto VLCCs, and thereby reducing the need for offshore reverse lightering. Today, we discuss the project to deepen the channel to 54 feet and its impact on crude exports.

In the three years since Moda Midstream acquired Occidental Petroleum’s marine terminal in Ingleside, TX, the company has developed millions of barrels of additional storage capacity, connected the facility to a slew of Permian-to-Corpus Christi pipelines, and increased the terminal’s ability to quickly and efficiently load crude onto the super-size Suezmaxes and VLCCs that many international shippers favor. Moda’s fast-paced efforts have paid off big-time, first by making its Ingleside facility by far the #1 exporter of U.S. crude oil and now with a $3 billion agreement to sell the terminal and related pipeline and storage assets to Enbridge. The transaction, which is scheduled to close by the end of this year, will make Enbridge — already the co-owner of the Seaway Freeport and Seaway Texas City terminals up the coast — the top dog in Gulf Coast crude exports. Today, we discuss the Moda agreement and how it advances Enbridge’s broader Gulf Coast export strategy.

Week by week, more than 20 terminals along the U.S. Gulf Coast export crude oil, but nearly half of the total export volumes are being loaded at just three facilities: the Moda Midstream terminal near Corpus Christi, the Enterprise Hydrocarbon Terminal in Houston, and the Louisiana Offshore Oil Port (LOOP) off the Louisiana coast. What gives these “Big 3” their edge? Location? Pipeline connectivity? Storage capacity? Loading rate? The answer, of course, is “all of the above.” There is more to the story, though, and other terminals are angling to become bigger players, presumably at the expense of the Big 3 themselves. Today, we begin a series on Texas and Louisiana’s largest oil export facilities, what they offer, how they’ve fared, and what they’re planning next.