Sean Strawbridge is a man on a mission. For the CEO of the Port of Corpus Christi (PortCC), that mission is to ensure his operation is ready to handle the new influx of Permian crude oil headed his way as a collection of new high-capacity crude pipeline projects are completed over the coming 6 to 12 months.
When I caught up with Strawbridge recently, he was not happy about reports indicating that his Port’s expansion and improvement efforts are somehow lagging and that the various facilities and projects he oversees will be caught unable to handle the new, bigger volumes.
“Nothing could be further from the truth,” he told me, “We are not ‘leaning on the rake,’ if that’s what people are thinking. We’ve got dredgers in the water, they’ve been working pretty much all of this year to deepen and widen the ship channel. From a deepening standpoint, we will have the deepest port channel in the entire U.S. gulf.”
That highly-publicized project to deepen and expand the PortCC main channel is the centerpiece project in Strawbridge’s world right now. But it is far from the only crucial piece to the complex puzzle of key projects that are proceeding simultaneously in this busy part of the world – far from it.
“We have existing dock projects that are in various stages of expansion right now, and we also have new docks being built,” Strawbridge pointed out. “We are building-out to have nominal [peak] capacity of in excess of 5 million barrels per day. That would be the capacity for crude exports alone.
“There is also a tremendous amount of new storage being built. Cushing, Oklahoma [America’s largest crude oil storage facility today] right now is around 75 million barrels of capacity – it would not surprise me if we end up approaching the 60-65 million barrel range, which would make us, as I like to call it, the ‘Cushing of the Coast.'”
All of this new capacity to receive, store and export bigger volumes of crude is much-needed. In a webinar conducted in June, industry advisory firm Wood Mackenzie estimated that demand for export capacity at PortCC alone will climb as high as 2.5 million barrels of oil per day by mid-2021, and remain at or above that level for years to come. The firm forecasts that “at peak production, the Corpus Christi region will account for 56% of total US crude shipments abroad.”
As a point of comparison, the U.S. Census Bureau estimated that America set a new record by averaging 3.16 million barrels per day of crude exports during the month of June. That’s for the entire country.
Strawbridge told me that he is confident that PortCC will be able to work through the byzantine federal budget processes to secure the remainder of funding needed to ensure the main channel expansion project does not experience any work stoppages. The project consists of four separate contracts that must be bid out and obtain their own budget earmarks, and PortCC itself is paying for what Strawbridge estimates will ultimately be about 34% of the total $400 billion+ project budget. That self-funding piece gives PortCC the flexibility to accelerate its own funds into the process to keep work proceeding ahead in the event of any federal budget delays.
Expansion projects are also proceeding rapidly in various satellite locations in the surrounding area. At Ingleside, which lies across Corpus Christi Bay from the main PortCC facilities, Moda Midstream is rapidly expanding its already-existing facility residing on what once was Naval Station Ingleside into a VLCC-capable export terminal. When fully-loaded, VLCCs (Very Large Crude Carriers) are capable of carrying up to 2.1 million barrels of oil. That facility will also ultimately have about 10 million barrels of associated storage capacity. The project will be fully operational by the end of this year.
Ingleside will also be home to the South Texas Gateway Terminal managed by Buckeye Partners LP, a joint venture between Marathon,
PortCC itself is partnering with the Carlyle Group and Lone Star Ports in another VLCC-capable project at Harbor Island, which lies across the Intra-Coastal Waterway from Port Aransas. Plans are for the channel to be dredged to a depth of 75′ up to Harbor Island, which will enable the facility there to fully load VLCCs without any offshore lightering operations.
PortCC also recently announced that it will partner with Phillips 66 on its Blue Water Texas Terminal, a planned VLCC-capable offshore loading terminal to be located northeast of Corpus Christi about 21 miles out into the Gulf of Mexico. “I think we’re the only port authority in the state that’s partnering with one of these buoy operators,” Strawbridge told me. “We like Phillips 66 as an operator. They are experienced in running single-point mooring facilities – they’ve run one off of the east coast of the UK in a place called Hull, where they have a refinery, since 1971.”
Once completed in mid-2022 – assuming all goes to plan – the Blue Water terminal would have the capacity to export about 1.56 million barrels per day.
All of this activity and much more is taking place in and around PortCC. It does not account for a growing number of additional expansion and new-build projects also proceeding at or near the Texas ports of Brownsville, Freeport, Port Arthur and Houston.
Bottom line: As recently as a few months ago, it was certainly reasonable to be concerned about a potential looming export bottleneck developing as all the new Permian takeaway pipelines begin to come online. But today, thanks in large part to the efforts taking place in and around PortCC, Permian-based oil producers are able to breathe a heavy sigh of relief.
Economists used to call this “just in time delivery.” Given the scope and scale of all of these various projects, it has been a lot to deliver.