Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints

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Texas’ Port Corpus Christi Poised To Become Top U.S. Crude Oil Exporter Along Gulf Of Mexico


Port Corpus Christi could emerge as the United States’ top crude oil export hub over the next decade, thanks to more than $380 million in new shipping facilities and three oil pipeline projects worth $5.2 billion, according to a new study.

Wood Mackenzie’s North America Crude Markets Service reported that the startup of three new pipeline projects at the beginning of the year will bring more than 2 million barrels of crude oil per day from the Permian Basin of West Texas to export terminals around Port Corpus Christi once completed.

“With the significant increase in demand for exports through Corpus Christi expected in coming years- the Corpus Christi region will account for 56 percent of total U.S. crude shipments abroad,” said John Coleman, a senior analyst at Scotland-based Wood Mackenzie.

Located on the western Gulf of Mexico, Port Corpus Christi is the fourth largest port in the U.S. in total tonnage. The city of Corpus Christi is located 220 miles from Houston and 150 miles from the Mexican border.

The three new Permian Basin pipelines slated for Port Corpus Christi include the $2.2 billion- 900,000 barrel-per-day Phillips 66’s Gray Oak; the $1.1 billion- 585,000 barrel-per-day Cactus II; and the $2 billion- 590,000 barrel-per-day EPIC Crude Oil Pipeline.

“Part of this story will be a significant amount of capacity being built out of the Permian basin, pointed at the Corpus Christi market,” Coleman said. “We expect this to quadruple Corpus Christi export volumes within five years.”

Oil production in the U.S. is on pace for a record-breaking 13.4 million barrels per day by the end of 2019, according to a recent report by energy research firm Rystad Energy. Texas dominates in domestic oil production, expected to soon produce 5 million barrels per day in oil— more than even any OPEC nation except Saudi Arabia.

To accommodate the increased volume of oil exports, Port Corpus Christi is also building the multibillion-dollar Harbor Island crude oil export terminal, a deep water terminal capable of loading supertankers known as Very Large Crude Carriers.

The Harbor Island project is a partnership between Port Corpus Christi and private equity firm, the Carlyle Group. Port Corpus Christi also recently started a $380 million project to deepen the Corpus Christi Ship Channel from 47 to 56 feet, and widen it from 400 to 530 feet.

Port Corpus Christi shipped out $4.5 billion worth of crude oil for the month of May, which put it behind the Port of Houston, which accounted for $8.24 billion in crude oil exports during the same period, according to data from analytics firm WorldCity.

The Port of Houston is home to the Houston Ship Channel, a 52-mile federal waterway that includes nine oil refineries that process around 2.3 million barrels per day of oil.

The price of crude oil was $57 at the time of this report. In the past several months, oil prices have fluctuated wildly due to the China-U.S. trade war, as well as tariff threats against Mexico.


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Lucid Energy Group entered into a new long-term natural gas gathering and processing agreement with Exxon Mobil Corp. subsidiary XTO Energy Inc., Lucid announced Tuesday.

Per the agreement, XTO will deliver natural gas production from southeastern New Mexico to Lucid’s South Carlsbad gas gathering and processing system. The agreement also enables gas and natural gas liquids deliveries to Exxon’s downstream and chemical manufacturing sites on the U.S. Gulf Coast.

“We have continued to grow our relationship with XTO in the northern Delaware Basin since its entry into New Mexico,” Lucid CEO Mike Latchem said in a company statement. “Lucid’s assets are strategically positioned for XTO’s development plans and complement what its affiliates are planning for midstream infrastructure within the basin and out of the basin to the downstream markets.”

Currently, Lucid’s system in the northern Delaware Basin encompasses more than 2,000 miles of pipeline spanning five counties in Texas and New Mexico.

Lucid Energy Group is the largest privately held natural gas processor in the Delaware Basin offering a full range of gas midstream services.

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Plains eyes Rockies expansion as oil shippers seek more pipeline space from Canada

May bring quicker access to refining, export markets

Line 3, Keystone XL, Trans Mountain delays stretch on

WCS discount to WTI narrows to $11.60/b Tuesday

 Plains All American Pipeline launched an open season this week to gauge demand for an expansion of its Western Corridor pipeline system to move more oil from Canada, Montana and Wyoming toward refining and export markets on the Texas Gulf Coast.
 The pipeline builder aims to boost capacity by 70,000 b/d and start service in the second quarter of 2021, it said in a notice.

The expansion could eventually move crude onto the proposed Red Oak and Liberty pipelines bound for Texas export terminals in Corpus Christi and Houston. Plains is a joint venture partner with Phillips 66 on the Red Oak project, which was eyeing initial capacity of 400,000 b/d depending on shipper commitments.

Western Canadian crude prices face pressure from pipeline constraints as the three main proposals for new takeaway capacity face protracted delays and court challenges. S&P Global Platts assessed Western Canadian Select at Hardisty at a lofty $11.60/b discount to the NYMEX WTI calendar month average Tuesday, up from minus $12.10/b Monday. But discounts for the grade have been much worse over recent months, having averaged nearly $46/b to WTI over October.

Differentials spiked in early December when the Alberta government announced it would order production curtailments starting in January.

Platts Analytics expects Enbridge's 370,000 b/d Line 3 expansion to begin moving crude into the US Midwest in mid-2021, and TC Energy's 830,000 b/d Keystone XL and/or the Canadian government's 590,000 b/d Trans Mountain expansion to be completed by late 2022.

Alberta Premier Jason Kenney said the province might extend its production cuts into 2020 due to delays in Enbridge's Line 3 expansion. In June, a Minnesota appeals court reversed the Line 3 approval after determining its environmental review was inadequate.



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Big Oil Plans to Unleash a Flood of Plastic From US Gulf
(Bloomberg) -- The world’s biggest oil and chemical companies are about to unleash a tidal wave of plastic raw materials by the mid-2020s, tapping cheap shale gas to meet growing demand from makers of everything from toys to plumbing to consumer goods.

Exxon Mobil Corp., Dow Inc., France’s Total SA, South Africa’s Sasol Ltd. and Saudi Basic Industries Corp. have built or announced at least $40 billion in new petrochemical facilities in Texas and Louisiana, according to data compiled by Bloomberg. The most recent is an $8 billion joint venture between Chevron Corp., Phillips 66 and Qatar Petroleum announced this week.

Companies involved | Projected cost | Location
Sasol | $11.8 billion | Louisiana
Exxon, Sabic | $10 billion | Texas
Chevron Phillips, Qatar Petroleum | $8 billion | U.S. Gulf Coast
Dow | $6 billion | Texas, Louisiana
LyondellBasell Industries NV | $2.4 billion | Texas
Exxon | $2 billion | Texas
Total, Nova Chemicals, Borealis | $1.7 billion | Texas

The investments in Gulf of Mexico coastal factories come amid a consumer backlash against plastic bags and straws for their environmental impact. The total amount of oceanic plastic waste is expected to more than double by 2030 if action isn’t taken now, the International Energy Agency said in a report last year.

In the U.S. alone, New York City, Seattle, Oakland and Miami Beach all have either banned straws or have pending proposals to do so. Boston, Chicago, Los Angeles and San Francisco prohibit plastic bags, while several other cities imposed fees for using plastic bags at grocery stores.

Mark Lashier, chief executive officer of the Chevron Phillips Chemical Co. joint venture that’s partnering with Qatar Petroleum, said he’s not worried about straw or bag bans hitting the plastics industry. Some forecasters see plastic demand growing quicker than oil, which is under threat from renewable energy and electric vehicles.

“We certainly take that into account in our supply and demand balances, but the demand in general for plastic materials is growing greater than 4% a year,” he said. “The world is going to need more and more of this as the world population grows.”

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