Growing US crude production will require new very large crude carrier (VLCC) terminals to come on line for the US to increase its export potential, even as considerable work lies ahead, shipbroker Gibson said.
With the International Energy Agency (IEA) forecasting the US to add 2.6mn b/d of crude output by 2028, crude flows from the US Gulf coast to Asia-Pacific are expected to increase, Gibson said. VLCCs often are the preferred vessel size for long-haul voyages owing to their lower shipping rates due to economies of scale.
For the US to increase its export potential, new terminals will need to come on line and reach full operational capacity as production grows, the shipbroker said.
"The current speed of these developments could start to raise some questions should sufficient progress not be made in the coming years," Gibson said.
So far in 2023, VLCCs have increased their market share on the US Gulf coast, hauling about 2.2mn b/d of the 3.9mn b/d exported through July, up from 1.3mn b/d of 3.2mn b/d exported over the same period a year earlier, according to data from analytics firm Vortexa. The only facility able to fully load a 2mn bl VLCC is the Louisiana Offshore Oil Port (LOOP), which exports about 240,000 b/d of mostly medium sour Mars.
Several other offshore projects have been proposed, with Enterprise Products Partners' Sea Port Oil Terminal (SPOT), off the coast of Freeport, Texas, the furthest along in the bureaucratic process and with a startup targeted for 2026-2027. Enterprise secured a key favorable decision for the deepwater port in late 2022 but must still complete other permitting requirements before it can obtain a license needed to start construction. The company expects the permits to be secured in September or October.
The Bluewater Texas project, a Phillips 66-Trafigura joint venture, is awaiting approval from the US Maritime Administration, but it is unclear what the potential time frame for approval is and it is unlikely to occur this year, Gibson said.
Energy Transfer's proposed Blue Marlin project, which would connect to its Nederland terminal, is expected to receive regulatory approval in the second quarter of 2024 to begin construction. Energy Transfer expects it would take 24-30 months to build the project once it reaches a final investment decision.
In the near term, a dredging project at the Texas port of Corpus Christi, the top US export hub, will allow VLCCs to increase their in-port load capacity to 1.6mn bl from 1.2mn bl, though an Aframax reverse lightering will still be required to top off the VLCCs.
