New Crude Accommodation At the Oil Tank Inn – Houston Crude Distribution

As we move toward the end of 2013, all eyes in the crude market will focus on the Texas Gulf Coast as a flood of over 1 MMBbl of new crude supplies arrives via pipeline. In anticipation of that bonanza, Oil Tanking Partners (OTP) are in the process of adding 7 MMBbl of crude storage capacity at their Houston Ship Channel terminal and looking to expand their Beaumont capacity. OTP is also benefiting by leasing dock space for propane exports. Today we look at OTP’s ongoing preparations for the flood.

Oil Tanking Group owns the world’s second largest independent oil terminal network. The company’s parent Marquard and Bahls AG and US subsidiary Oil Tanking North America own a controlling interest in OTP, a master limited partnership (MLP – see Masters of the Midstream), which operates two large crude oil and refined products terminals in Houston and Beaumont, TX.  We last looked at Oil Tanking operations a year ago (see Crude Accommodation at the Oiltank Inn). Since that time the company’s Texas Gulf Coast operation has expanded crude oil storage capacity by about 4 MMBbl with another 3.2 MMBbl under construction to be in service by the end of 2013.

Houston Ship Channel Crude Terminal

The OTP Houston terminal will have over 16 MMBbl of crude storage capacity by the end of 2013 and close to 20 MMBbl by the end of 2014. The map below shows the terminal location on the Houston Ship Channel as well as connectivity to area refineries and incoming flows of crude from US and Canadian domestic production. The Houston terminal has been the focus of the majority of OTP’s investment in expanded storage. Phase 1 of the adjacent Appelt expansion will house 3.2 MMBbl of new crude storage by the end of 2013 and Phase 2 of that project adds another 3.3 MMBbl of capacity by the end of 2014.  In the past year OTP Houston have also completed connections to the Enterprise Products Partners ECHO terminal to the south (see ECHO and the Blending Men – Texas Terminal Wars) and are negotiating to build a new 2-way connector to the Crossroads Junction/Moore Road terminal to the north. OTP Houston is already connected directly to four refineries located in the Ship Channel (combined capacity 850 Mb/d) as well as the ExxonMobil Baytown refinery (560 Mb/d) to the East and three Texas City refineries to the south (combined capacity 790 Mb/d).

Source: Oiltanking Investor Presentation (Click to Enlarge)

By the middle of 2014 the OTP Houston terminal will have pipeline connectivity to over 2 MMb/d of domestic and Canadian crude oil flowing into Houston (see summary table below). OTP is the destination delivery point for the Kinder Morgan crude and condensate pipeline that brings up to 300 Mb/d of supplies from the Eagle Ford. A new pipeline connection to the ECHO terminal allows crude from the Enterprise Product Partners (EPP) Eagle Ford pipeline (350 Mb/d) and the Seaway pipeline from Cushing (400 Mb/d today – expanding in early 2014 to 850 Mb/d) to reach OTP. The Crossroads junction terminal to the north of OTP (see the map above) will be the delivery point for the Keystone XL Gulf Extension Houston lateral that will deliver up to 130 Mb/d of crude from Cushing by early 2014. Crossroads also links OTP Houston to the Shell Ho-Ho pipeline (see Oh-Ho-Ho Its Magic – The Missing Link for Gulf Coast Crude), currently being reversed. The Ho-Ho pipe will begin to flow 250 Mb/d of crude supplies east from Magellan’s East Houston terminal, via Crossroads, to Houma and St James, LA by the end of 2013. The East Houston terminal is the receipt point for Permian Basin crude via the Longhorn pipeline (225 Mb/d by the end of 3Q 2013) and the planned BridgeTex pipeline that will flow up to 300 Mb/d by mid 2014 if it is approved (see The Gates of Magellan). This extensive connectivity made OTP Houston a no-brainer delivery point in the specification for the new Light Houston Sweet (LHS) assessment that Platts launched recently (see Houston We Have An Assessment).

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