Down To The River: Crude By Barge Traffic Along the Gulf Coast

Waterborne crude shipments out of the Port of Corpus Christi are still growing this year – averaging 700 Mb/d as of May 2015. A veritable armada of barges and tankers has converged on South Texas to help move all that crude. A large part of the shipments are on small inland tank barges plying the Gulf Intracoastal Waterway (GIWW) - a 65 years old canal system that forms a vital backbone for Gulf Coast refiners. Today we describe the changing profile of barge shipments along the Gulf of Mexico.

This series updates previous RBN Energy analysis of crude movements by barge – along the U.S. inland waterway system that includes the Mississippi River and the GIWW between Texas and Louisiana. In Episode 1 we first recapped previous RBN coverage of the barge market - describing the 10 - 30 MBbl tank barges that are pushed up and down the river system in unit tows of 2-3 barges by “towboats”. We described how the use of barges to carry crude oil has increased significantly since U.S. crude production from shale took off in 2011. Crude barge traffic between the Midwest and the Gulf Coast increased 10 fold between 2010 and 2013 – peaking in October 2013 at 158 Mb/d. Since then southbound Mississippi crude by barge volumes have fallen off just as rapidly – in response to new pipelines coming online to provide a more efficient route to market. At the same time, crude price differentials that previously justified the higher cost of barge transport (subject to Jones Act regulations that increase shipping costs) narrowed during 2013 and have not recovered since. In Episode 2 we looked at barge traffic on the Ohio River carrying lease condensate (categorized by EIA as crude oil) from the Ohio Utica to refineries along the Ohio and Mississippi River systems down to the Gulf Coast. In contrast to crude-by-barge traffic on the Mississippi River that originated in the Midwest – Ohio River traffic has only taken off in the past two years and has increased threefold in 2015 – peaking at nearly 70 Mb/d in May 2015. There are also plenty of terminals along the Ohio River - being used today or under construction - that can load crude oil onto barges. However regional crude production volumes do not appear to justify increased terminal build out – given that pipeline alternatives are already being developed. This time we turn to the large-scale crude-by-barge shipments along the Gulf Coast driven by a nearly 12-fold growth in crude production since 2011 - to 1.68MMb/d in May 2015 - in the South Texas Eagle Ford basin.

We have previously covered the growth of Eagle Ford crude – much of which is the ultra light variety known as lease condensate – as well as the infrastructure to get it to market via southbound pipelines to Corpus Christi and eastbound pipelines to Houston (see Condensate City). Local refineries in that port city consume some of the crude and condensate taking the southbound route to Corpus but the majority is shipped up the Gulf Coast to refineries in the Houston, Beaumont/Port Arthur regions or further east to Louisiana and the Mississippi River delta. A good deal of that waterborne traffic is carried on the Gulf Intracoastal Waterway (GIWW). The 65 year old GIWW is a navigable inland waterway running approximately 1100 miles along the Gulf of Mexico from Carrabelle, Florida, to Brownsville, Texas (see map in Figure #1). The GIWW is maintained toll free by the Army Corps of Engineers and is the nation’s 3^rd busiest waterway. (Just this past Monday (7/20/2015) a collision between two refined product barges outside Houston closed down the waterway temporarily – a not uncommon occurrence.) The GIWW is primarily used by barges and links important refining centers along the Texas and Louisiana Gulf Coast as well as the Mississippi River system.