Deep Water, Part 4 - Tallgrass's Plan for a Crude Oil Export-Import Terminal Off the Louisiana Coast

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.

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.

To access the remainder of Deep Water, Part 4 - Tallgrass's Plan for a Crude Oil Export-Import Terminal Off the Louisiana Coast you must be logged as a RBN Backstage Pass™ subscriber.

Full access to the RBN Energy blog archive which includes any posting more than 5 days old is available only to RBN Backstage Pass™ subscribers. In addition to blog archive access, RBN Backstage Pass™ resources include Drill-Down Reports, Spotlight Reports, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. If you have already purchased a subscription, be sure you are logged in For additional help or information, contact us at info@rbnenergy.com or 888-613-8874.