The deepwater crude oil export projects under development along the U.S. Gulf Coast offer a number of potential benefits to shippers and customers alike. These include the ability to fully load a Very Large Crude Carrier (VLCC) and the economies of scale that come with that, the elimination of reverse lightering and the corresponding decrease in emissions, and freed-up access on congested ship channels for other exports such as NGLs, refined products and clean ammonia. So, given all the potential upside, why hasn’t anyone fully committed to building one? In today’s RBN blog, we focus on the obstacles faced by deepwater export facilities and where each of the projects under development is in the permitting process.
Note: On Tuesday morning, April 9, Enterprise announced that it has received the deepwater port license for its Sea Port Oil Terminal (SPOT) from the U.S. Maritime Administration (MARAD). Enterprise submitted its original application for the VLCC-ready offshore terminal in January 2019.
As we noted in Part 1 of this series, the U.S. crude oil market has undergone a transformation over the past 15 years. The Shale Revolution has allowed producers to unlock volumes that were unimaginable to many not long ago, especially in the champion of U.S. production areas — the Permian Basin. As we’ve blogged about frequently (see May Exports Be With You), crude export volumes took off and are expected to continue growing along with U.S. production throughout the 2020s, eventually stressing the ability of existing export terminals along the Gulf Coast (see Figure 1 below) to keep up. There is only one operational deepwater crude oil terminal with a single-point mooring (SPM) in the U.S.: the Louisiana Offshore Oil Port (green diamond), or LOOP. Located 17 miles off Port Fourchon, LA, it was completed more than 40 years ago, but until 2013 it was only used for importing crude oil and didn’t load its first VLCC for export until 2018. Because LOOP receives crude oil from its onshore storage terminal at Clovelly, LA, most of the exported volumes are medium-sour crude oil sourced from the Gulf of Mexico.
Figure 1. U.S. Gulf Coast Export Terminals. Source: RBN
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