By the end of 2014 an additional 1.7 MMb/d of pipeline capacity will open up from the Midwest and the Permian basin – bringing crude into the Texas Gulf Coast region. A good deal of that crude will pass through pipelines and/or storage in the Houston Ship Channel area. Ordinarily all that pipeline capacity should trump crude-by-rail due to lower transport costs. But the onslaught of rail could change the game, as over 200 Mb/d of new rail capacity is being built in the Channel area Today we discuss the logic of crude-by-rail in Houston.
Previously on Crude Loves Rock’n’Rail…
The first episode in this crude by rail series provides an introduction and overview of the “Year of the Tank Car” (see Crude Loves Rocking Rail). We describe the rapid growth in US crude oil production that put pressure on pipeline logistics and made rail a viable alternative for moving crude to market. The second installment (see Crude Loves Rocking Rail – The Bakken Terminals) began our survey of rail loading terminals with a map and a complete list of facilities in North Dakota. The follow up episodes covered EOG, Hess and Inergy, Plains, Enbridge and Global, Bakken Oil Express, Dakota Plains, BakkenLink and Savage and Bakken terminals north of the Canadian border in A Plethora of Terminals in the Williston Basin. We discussed the development of rail terminals loading heavy oil sands bitumen crude in Western Canada in two episodes Heat It! (Bitumen Economics Part 1) and Part 2. The last episode on rail loading covered terminals built outside the Bakken and Canada in the Niobrara, Eagle Ford, Permian and Anadarko basins as well as Cushing, OK (see Load Terminal Craze). This is episode four in our survey of rail destination terminals with the first three covering the East (see East Coast Delivery Terminals) West (see West Coast Destinations) and Eastern Gulf (see The Bakken St James Shuttle) Coasts respectively.
The complete series can be found at the www.rbnenergy.com website under the Daily Energy Post tab. In this episode we continue our survey of destination terminals with the first of two episodes on crude rail unloading terminal in the Gulf Coast region West of the Mississippi.
Omissions from East of the Mississippi
First we return briefly to the last episode to remedy facilities that we missed in The Bakken St James Shuttle – although to be fair we did mention them all in our series on barge transport (see Good Year For the Barges). Starting with the Marquis barge to rail facility at Hennepin on the Illinois River opened in July 2012 – OK not technically in the Gulf Coast region but not on the East or West Coast either so you have to put it somewhere. The Marquis Hennepin terminal is adjacent to an existing ethanol terminal that can store 90 MBbl of crude oil on site and transfer up to 35 Mb/d from rail to barges via BNSF railroad. Crude is delivered from the Bakken or Canada and sent by barge down the Illinois to the Mississippi and on to Gulf Coast refineries. Marquis also opened a second larger rail-to-barge terminal at Hayti, MO in October 2012 that is currently unloading 118 car unit trains (75 Mb/d) via BNSF. Owners Marquis Missouri LLC are doubling the capacity of the Hayti facility and work is expected to be complete by 4Q 2013. Also on the lower Mississippi at St Louis is the Seacor Holdings Gateway Terminal that can unload 65 Mb/d of crude from UP rail cars onto barges. Finally we overlooked the proposed Petroplex International LLC storage and rail-to-barge terminal backed by Macquarie Capital that is awaiting finance approval for construction at St James, LA. That terminal will have a 120-car unit train loop capable of unloading 70 Mb/d from UP railroad.
Gulf Coast West of the Mississippi – Houston Ship Channel
The Houston Ship Channel (HSC) is the conduit for ocean going vessels between the Port of Houston, Galveston Bay and the Gulf of Mexico. One of the largest refinery and petrochemical complexes in the world runs along the Ship Channel (see Crude Accommodation at the Oiltank Inn). The Port Terminal Railroad Association (PETRA) operates rail service within the Ship Channel complex (see map below). The various rail yards along the channel allow connection to UP, BNSF and Kansas City Southern (KCS) railroads. Many of the oil refinery complexes in the HSC distribute refined products out by rail but most have traditionally only received crude by water or pipeline. One terminal is being purpose built to unload rail tank cars in the HSC. That is the KW Express facility being constructed at Greens Port Industrial Park. KW Express LLC is a partnership between Kinder Morgan Energy Partners LP and Watco LLC. The terminal is designed to unload 210 Mb/d of crude oil under a long-term agreement with Mercuria Energy
Trading Company. The facility will be capable of unloading up to 3 unit trains a day of crude and or condensate and loading 100 Mb/d onto barges.
Source: PETRA http://www.ptra.com/index.php/about-us/ptra-rail-network-map.html (Click to Enlarge)
There are no other purpose built rail unloading terminals currently proposed for the Ship Channel that we are aware of (This statement doesn’t include Beaumont and Port Arthur terminals which we will cover in the next episode). There are a couple of terminals that are developing rail-unloading facilities that could very well be used for crude oil, but neither of these are specifically designed to handle crude. The first of these is the new Battleground Oil Specialty Terminal Company LLC (BOSTCO) facility located at La Porte, TX in the outer Ship Channel. Kinder Morgan and TransMontaigne Partners LP (part of Morgan Stanley Commodities) own BOSTCO jointly. The Terminal is under construction and expected in service October 2013. BOSTCO is a black oils terminal meaning that it will provide storage and blending services for residual fuel oil, vacuum gasoil and other heavy oils as well as crude oil. BOSTCO will have a twin track 12 railcar unloading facility expandable to 30 cars and connected to the UP railroad. The terminal will have an initial 6 MMBbl of storage capacity. A second terminal facility that is expanding rail unloading facilities is LBC Terminals in Galveston Bay adjacent to the HSC in the Bayport industrial complex (Seabrook, TX). In January 2013 LBC announced an expanded marine ship and barge dock project including storage and rail facilities. The LBC terminal primarily handles refined products but the expansion plans permit crude by rail unloading. The table below summarizes crude by rail unloading facilities in the HSC.