offshore terminals

This summer and fall, more than a half dozen companies and midstream joint ventures have announced plans for new deepwater export terminals along the Gulf Coast that — if all built — would have the capacity to load and send out more than 10 MMb/d, which is notable because the U.S. Lower 48 currently produces 11.2 MMb/d. Most of these projects won’t get built, of course — export volumes may well continue rising, and the economics of fully loading VLCCs at deepwater ports are compelling, but even the most optimistic forecasts suggest that only one or two of these new terminals will be needed through the early 2020s. So, there’s a fierce competition on among developers to advance their VLCC-ready export projects to Final Investment Decisions (FIDs) first. Today, we discuss highlights from our new Drill Down Report on deepwater crude export terminals as well as the export growth and tanker-loading economics that are driving the project-development frenzy.

Just as midstream companies are in a fierce competition to build new crude oil pipelines from the Permian to the Gulf Coast, there’s a race on to develop what would be the first Gulf Coast terminal in a generation capable of handling fully laden Very Large Crude Carriers. There’s a lot at stake. Currently, 2-MMbbl VLCCs can be filled to the brim without reverse lightering only at the Louisiana Offshore Oil Port (LOOP), and even if U.S. crude production continues to rise at a fast clip, it’s unlikely that more than another one or two high-capacity, VLCC-ready terminals would be needed over the next five years. And, assuming there’s not an overbuild situation, the project or projects that ultimately advance would be expected to be in-demand and highly utilized — VLCCs are the preferred mode of transporting crude to Asia and other far-away markets, and being able to fully load VLCCs saves the considerable cost and time associated with reverse lightering these supertankers in deep water. Today, we conclude our series on the fast-paced efforts to develop export terminals in waters deep enough to float VLCCs chock-full of oil.

There are common drivers behind the handful of offshore crude oil terminals now under development along the Gulf Coast, chief among them the well-founded belief that shippers would prefer putting crude on Very Large Crude Carriers (VLCCs), which can only be fully loaded in deep water. But each of these projects also has unique nuances — its own specific rationale and characteristics. Tallgrass Energy’s plan is a case in point in that it involves a new pipeline from the crude hub in Cushing, OK, to the refinery center in St. James, LA, and to a new onshore crude storage and loading terminal a few miles down the Mississippi River, to be followed by a VLCC-ready offshore terminal capable of both exporting and importing crude. Today, we continue our review of made-for-VLCCs offshore terminals with a look at Tallgrass’s effort to deliver neat, unblended barrels directly from multiple inland plays to deep water — “shale-to-ship,” in other words.

Since mid-July — only a few weeks ago — four proposals have been unveiled to build offshore crude export terminals along the Gulf Coast that would be capable of fully loading Very Large Crude Carriers. That’s an extraordinary burst of interest in new infrastructure development, and a signal that (1) more export growth is on the horizon and (2) VLCCs will play a much bigger role in transporting that crude. A leading contender in the race to construct new offshore terminals is Trafigura, the Swiss-based logistics and physical-trading giant, which in recent years has become a major player in U.S. energy markets. Today, we continue our review of made-for-VLCCs offshore terminals with a look at Trafi’s plan.

Much like their heated competition to build new crude oil pipelines from the Permian to the Gulf Coast, midstream, logistics and trading companies are jockeying to construct the first new export terminal capable of fully loading Very Large Crude Carriers — Trafigura joined the fray earlier this week. While VLCCs are by far the most cost-efficient way to haul crude to Asia, their Godzilla-like physical dimensions restrict the number of land-based terminals they can use. And even those that can accommodate these seagoing behemoths can only load a VLCC part-way — “reverse lightering” out in deeper, open waters is required to fill the supertanker to the tippy top. So a handful of ambitious midstreamers are developing plans for offshore terminals out in deep water, miles from the Texas coast. Today, we continue our review of these proposals with a look at JupiterMLP’s plan for a terminal off Brownsville — and a new Permian pipeline to the city.

As Gulf Coast marine terminal owners consider ways to at least partially load Very Large Crude Carriers (VLCCs) at their facilities, a handful of midstream companies also are planning offshore terminals in deep water that would allow the full loading of VLCCs via pipeline. Projects under development by Oiltanking and others for sites along the Texas coast would appear to have at least two legs up on the Louisiana Offshore Oil Port, or LOOP. For one, they’d have more direct access to the Permian, Eagle Ford and other crudes flowing to coastal Texas. For another, the new terminals would be focused on crude exports — no double-duty for them. Today, we begin a review of the projects vying to be the first LOOP-like project in the deep waters off the Lone Star State.