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How Much More Can She Stand, Part 2 - Crude Crisis Squeezes Export Terminals

Just a few months ago, crude oil producers and marketers were wondering whether there would be enough marine terminal capacity along the Gulf Coast to handle the steadily increasing volumes of crude that would need to be exported over the next few years. Now, with WTI prices hovering around $25/bbl and producers slashing their 2020 drilling plans, expectations of rising U.S. production and exports are out the window. Instead, what may be shaping up is a fierce competition among the owners of existing storage facilities and loading docks to offer the most efficient, lowest-cost access to the water. Today, we continue our series with a look at two large Houston-area facilities: the Houston Fuel Oil Terminal and Seabrook Logistics Marine Terminal.

This is the second episode in our series. In Part 1, we said that the volumes of mostly light, sweet crude from the Permian and other U.S. shale plays being shipped overseas have taken off since the ban on most exports of U.S. crude was lifted in late 2015 — from ~600 Mb/d in 2016 to ~2.7 MMb/d in 2019, and ~2.9 MMb/d in the first two and a half months of 2020. We also referred back to our Where the Boat Leaves From blog last summer, where we discussed our estimate that, as of mid-2019, crude oil export capacity along the Gulf Coast stood at about 5 MMb/d — enough to meet current needs but well short of what would be needed if export volumes kept rising. Finally, we began our review of marine terminals along the Texas and Louisiana coasts with a look at the Seaway Freeport and Seaway Texas City facilities, both part of the broader Seaway Crude Pipeline (SCP) system, which is jointly owned by Enterprise Products Partners and Enbridge. We estimated Seaway Freeport’s export capacity at 200 Mb/d and Seaway Texas City’s at 300 Mb/d. Today, we turn our attention to two other large marine terminals in the Houston region.

Houston Fuel Oil Terminal

Located on more than 330 acres along the Houston Ship Channel, the Houston Fuel Oil Terminal (HFOT) became operational in 1979. Initially, the terminal was involved primarily in storing, blending and moving residual oil. HFOT started handling crude oil in 1992, and in recent years has become very active in the crude oil export trade. The terminal also is one of the largest providers of residual oil storage along the Gulf Coast.

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