There are common drivers behind the handful of offshore crude oil terminals now under development along the Gulf Coast, chief among them the well-founded belief that shippers would prefer putting crude on Very Large Crude Carriers (VLCCs), which can only be fully loaded in deep water. But each of these projects also has unique nuances — its own specific rationale and characteristics. Tallgrass Energy’s plan is a case in point in that it involves a new pipeline from the crude hub in Cushing, OK, to the refinery center in St. James, LA, and to a new onshore crude storage and loading terminal a few miles down the Mississippi River, to be followed by a VLCC-ready offshore terminal capable of both exporting and importing crude. Today, we continue our review of made-for-VLCCs offshore terminals with a look at Tallgrass’s effort to deliver neat, unblended barrels directly from multiple inland plays to deep water — “shale-to-ship,” in other words.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
This is the fourth episode in our series. In Part 1, we discussed the ongoing boom in U.S. crude oil exports, which have been rising steadily since the 40-year ban on most exports was lifted in December 2015. Crude exports averaged 590 Mb/d in 2016, 1.1 MMb/d in 2017, and more than 1.8 MMb/d so far in 2018. While 2-MMbbl VLCCs are by far the most cost-efficient way to haul crude to Asia, their humongous physical dimensions restrict the number of land-based terminals they can use. A typical VLCC is about 1,100 feet long, with a beam (or width) of nearly 200 feet and a fully loaded draft of 72 feet. And even those terminals that can accommodate VLCCs can only load these supertankers part-way — “reverse lightering” out in deeper, open waters is required to fill a VLCC to the brim. We also reviewed the joint plan by Oiltanking, Enbridge and Kinder Morgan to develop a crude export terminal 30 miles off the coast of Freeport, TX (yellow diamond in Figure 1). In Part 2, we considered JupiterMLP’s proposal for an offshore export terminal only six miles off Brownsville (light blue diamond) — and a new long-haul pipeline from the Permian to that South Texas city. Last time, in Part 3, we looked at the plan by Trafigura, the international logistics and trading company, to build a deepwater export terminal 15 miles off Corpus Christi (lavender diamond). Each of these projects also calls for the development of several million barrels of onshore storage capacity to support the regular loading of VLCCs.
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About the song
“Deep Water” is a track off country singer George Strait’s 1986 album, 7. "Deep Water" was written by Fred Rose and was first recorded and released by Bob Wills and his Texas Playboys in 1948. George Strait’s 7 LP — his seventh album — reached #1 on the Billboard Top Country Albums chart and #27 on the Billboard Top 200 Albums chart. It produced two #1 hit singles, “Nobody in His Right Mind Would’ve Left Her” and “It Ain’t Cool to Be Crazy About You.” Personnel on the LP were: George Strait (lead vocals and acoustic guitar), Curtis Young (background vocals), Eddie Bayers (drums), David Hungate (bass), Billy Joe Walker (guitar), Reggie Young (guitar), Richard Bennett (guitar), John Jarvis (piano), Johnny Gimble (fiddle and mandolin) and Paul Franklin (steel guitar).
George Strait is an American country music singer, songwriter, actor, and record producer. Many consider Strait the “King of Country Music.” He has sold more than 120 million records worldwide and has 13 multi-Platinum, 33 Platinum, and 38 Gold albums. He started his musical journey playing in a rock-and-roll cover band during his high school years in Pearsall, TX. He started singing country music in an Army-sponsored country band while stationed in Hawaii. After his stint in the Army, Strait enrolled as a student at Texas State University in San Marcos, where he formed the Ace in the Hole Band. After releasing some music on an independent Texas label, he signed his first record deal with MCA Records in Nashville in 1981. He has released 29 studio albums, three live albums, 12 compilation albums, one soundtrack album, and 102 singles. He has appeared in three motion pictures and one television show. He holds the record for most ACM and CMA Awards and is third only to Elvis Presley and The Beatles for the most Gold and Platinum albums. He was inducted into the Country Music Hall of Fame in 2006. Strait has retired from touring, giving the final concert on his The Cowboy Rides Away Tour in Arlington, TX, in June 2014. He still occasionally records and is scheduled to appear at nine stadium shows with Chris Stapleton in 2024, with the first set for May 4 in Indianapolis.
