Viewpoint: Corpus frenzy to propel US crude exports

Market: Crude oil, Freight
27/12/19

US crude exports are poised to hit a fresh record in 2020 on the back of a series of infrastructure projects designed to add capacity to and from the Texas Gulf coast.

Corpus Christi could add at least 800,000 b/d of US crude export capacity by mid-2020 to US crude exports, which already hit a record high of 3.38mn b/d in October, with the startup of Buckeye Partners' South Texas Gateway crude export terminal. The facility will include two deepwater docks capable of berthing very large crude carriers (VLCC) and a possible third dock in the future.

Phillips 66's 900,000 b/d Gray Oak pipeline started initial service in the fourth quarter of 2019 and is expected to be in full service by the end of the first quarter of 2020, carrying Permian basin crude to Corpus Christi destinations. From there, shippers can connect to the future South Texas Gateway terminal as well as Kinder Morgan's 300,000 b/d crude and condensate pipeline (KMCC) to the Houston Ship Channel.

Midstream companies have been racing to add takeaway capacity out of the Permian, pushed by booming production there and growing interest in exporting US crude. The Corpus Christi port district exported roughly 1.07mn b/d of crude oil in October to surpass Houston-based exports that month by nearly 40pc, or 305,000 b/d, according to the latest available statistics by the US Census Bureau.

That marked the second time Corpus topped the list of US exporting hubs. Two new large pipelines — the 670,000 b/d Cactus 2 and the 400,000 b/d Epic line — went into service in August moving Permian crude to the Corpus Christi area. Corpus crude exports surged to more than 1mn b/d by the end of September as key regional exporters ramped up WTI loadings for Europe and Asia-Pacific to clear volume amid a lack of available storage near the south Texas port.

Epic Midstream this month loaded its first Aframax tanker at the converted IGC marine terminal on the Inner Harbor of the Corpus Christi Ship Channel. Epic repurposed the facility to export crude while a larger export terminal is under construction. The larger terminal will be able to load Suezmax-sized tankers and is expected to start service in the third quarter of 2020.

That followed Plains' commissioning of a 50,000 bl/hr Suezmax-capable berth at the Eagle Ford Terminals Corpus Christi facility in September, adding incremental Permian and South Texas crude supply capacity to the global market.

The WTI fob Corpus Christi market is comprised of two primary sellers — Trafigura and Occidental Petroleum — though it is poised to develop into a much more diverse hub with the emergence of a new inland terminal and pipeline connectivity hub nearby in early 2020.

Hilcorp affiliate Harvest Midstream is building the Midway terminal which will connect to multiple export terminals in the Ingleside area, including the Flint Hills Resources terminal and the South Texas Gateway terminal.

The pipeline connecting Midway to the export terminals will have a capacity of 600,000 b/d, of which 380,000 b/d will come from existing Harvest Eagle Ford pipeline systems. The Ingleside pipeline will also connect to other terminals in the Midway and Taft area. It is expected to begin service in the first quarter of 2020.

By Amanda Hilow

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