Enbridge joins Enterprise VLCC offshore project

Market: Crude oil
09/12/19

Midstream company Enbridge is joining Enterprise Products Partners to develop an offshore crude terminal near the Texas coast that can load very large crude carriers (VLCCs).

The two companies have executed a letter of intent to jointly develop the deepwater terminal known as the Sea Port Oil Terminal (SPOT) off the coast of Freeport, Texas. Under the letter of intent, Enterprise and Enbridge agreed to negotiate an agreement which would allow Enbridge to buy into SPOT after the project receives a deepwater license from US regulators.

Enbridge said it has agreed to jointly market and seek customer support for the SPOT project.

Enterprise made a final investment decision on the offshore project earlier this year after signing term contracts for crude transport, storage and marine services with Chevron, a key oil producer in the Permian basin.

Enterprise submitted an application to the US Maritime Administration (Marad) in January for SPOT. The project includes two crude pipelines running from the port to the shore. Two single-point mooring buoys will be able to load and export oil at about 85,000 bl/hour.

Enbridge is also part of a competing project with Oiltanking known as the Texas Crude Offshore Loading Terminal or Texas Colt. That project has also submitted an application with Marad.

Enbridge said today that it will work to market and seek customers for Spot first "while positioning Texas Colt or a similar project to proceed in the future if the export market grows to require it."

The deal between Enterprise and Enbridge shows that consolidation is likely among US offshore VLCC projects.

Several other companies — including Phillips 66, Trafigura, Tallgrass Energy and Sentinel Midstream — are also weighing offshore oil ports in the US Gulf coast as demand grows for exporting US crude.

The terminals will be key to the growth of oil exports, which hit a record high of 3.38mn b/d in October, according to the most recent Census trade data.

Currently, only one US port is able to fully load a VLCC — the Louisiana Offshore Oil Port (Loop) about 20 miles (32km) off the coast from Grand Isle, Louisiana.

By Eunice Bridges

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