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Beaumont gets a Bakken boost

9 Aug 2017, 2.47 pm GMT

Beaumont gets a Bakken boost

Houston, 9 August (Argus) — Texas' first major oil port, Beaumont/Port Arthur, took a step up in prominence last month when the 520,000 b/d Bakken pipeline system opened for business, terminating at two major tank farms in neighboring Nederland.

While terminal operators in Houston and Corpus Christi jockey for position and argue their ports' merits, more crude than ever is flowing into the state's southeastern corner.

Pipeline terminals

The jewel in the crown of Beaumont/Port Arthur's regional crude infrastructure is Energy Transfer Partners' (ETP) 26mn bl crude terminal at Nederland, known as the Sunoco Logistics terminal before the companies merged this spring. The sea of storage tanks is connected to 1.5mn b/d of local refinery capacity and virtually every area pipeline of note — including the Bakken system, TransCanada's 700,000 b/d Marketlink pipeline from Cushing, Oklahoma, and ETP's 350,000 b/d Permian Express system — which could grow by 100,000 b/d by year's end.

The Nederland terminal also is connected to the Strategic Petroleum Reserve, which is in the process of fulfilling multiple oil sales directives from Congress that rely on Gulf coast commercial infrastructure.

Nederland's size, complexity and connectivity allow ETP to offer a wide range of services, chief operating officer Mackie McCrea said on a conference call earlier this year.

"We are really excited about our team's being able to go in and offer whatever service a shipper or customers are looking for, like we have been able to do on the gas side," he said.

The next major connection should be an extension of the outbound 480,000 b/d Bayou Bridge crude pipeline from Lake Charles to the NuStar Energy terminal at the major eastern Gulf crude hub at St James, all in Louisiana. The first leg moved 83,000 b/d of crude to Lake Charles, where co-owner Phillips 66 operates a 252,000 b/d refinery.

The Bayou Bridge expansion is slated for completion by the end of this year, with an initial capacity of 280,000 b/d, although growing environmentalist opposition to necessary permits, including a lawsuit over a key wetlands permit granted this spring, could present a snag.

Not only is Phillips 66 a partner in the new ETP crude lines running into and out of Nederland, those lines also serve Phillips 66 Partners' neighboring terminal there that can export 400,000-600,000 b/d of crude and products.

Phillips bought the former Unocal refinery site in 2014, which has 6.7mn bl of crude storage — including 1.2mn bl of tankage added last year and another 800,000 bl this year. The facility also has 2.4mn bl of products storage, with 1.2mn bl more coming on line soon, along with deepwater, rail and truck access.

Eventually, Phillips plans for terminal capacity to reach 16mn bl.

"We have done oil exports out of Beaumont already in this year, and so I think we look at it and say as long as those new pipelines get connected, the volumes are coming via from North Dakota, the midcon and the Permian, et cetera, then that will continue to build," Phillips 66 president Tim Taylor said.

Enterprise Products Partners, which boasts 4mn b/d of crude loading capacity at its upper Gulf coast terminals, has five docks at its twin Beaumont terminals, only two fewer than at its flagship Houston Ship Channel terminal. The company can feed Beaumont on its Seaway system out of its Echo terminal in Houston, and like the other storage centers it also can serve the four large refineries in the Beaumont/Port Arthur area.

The problem with Beaumont/Port Arthur is that it has the shallowest maximum draft of the five largest oil ports in Texas at 40ft along with the lowest air draft at 136ft and the shortest maximum beam — or ship width — at 157ft.

The Sabine Neches Navigation District in 2014 won federal approval to deepen the channel to 48ft, but it was part of a 12-year project that ultimately will rely on US Army Corps of Engineers funding before it can begin. Channel depth maintenance has remained at 40ft for 55 years.

This spring, Enterprise's chief executive was adamant that the Houston Ship Channel is the premier bulk liquids port along the Gulf coast despite its large Beaumont presence.

"Nothing compares to the Ship Channel's capabilities," he said. "Nowhere has the combination of over 100 pilots, designated barge lanes, two-way traffic, a draft of 45ft, max beam of 170ft, air draft of 175ft and — probably most important — somewhere in the neighborhood of 60 berths."

Rail

Built in the heyday of crude by rail, the Jefferson Energy terminal at Beaumont began operation in late 2013 taking light crude, specifically Niobrara shale production from Colorado. As shale basins have added pipeline capacity and reduced their need for rail movements, the terminal has turned its attention to heavy Canadian cargoes that are increasingly moving in tank cars.

Jefferson can unload pure bitumen using steam, and release empty trains within 24 hours and load directly to barges or into tanks.

Another rail terminal, GT OmniPort, was bought by Howard Energy Partners in 2015, after beginning life as a crude-by-rail receipt site. Howard said earlier this year that it was adding a 300,000 b/d deepwater dock and pipeline capability to the Port Arthur site and pivoting toward refined products, having loaded a unit train that delivered diesel to Mexico in January.

Another Port Arthur project, a crude unloading terminal long envisioned by Kansas City Southern Railway (KCS), never did get off the ground after two attempts. KCS first partnered with terminal operator Savage and, when that fell through, tried again with Global Partners with a plan to open by early 2017. But Global was unable to sign firm shippers.

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Southeast Texas crude infrastructure

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