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Enbridge, Kinder, Oiltanking Ponying Up for Texas Offshore VLCC Facility

Enbridge Inc. disclosed Tuesday it is working on a joint project with Kinder Morgan Inc. and Oiltanking GmbH to build a very large crude carrier (VLCC) loading facility offshore Texas to expedite oil exports.

The $800 million project under development, called Texas Colt, could be ready by late 2021, Enbridge Executive Vice President Guy Jarvis disclosed during an investor event in New York City.

“Enbridge along with our partners Kinder Morgan and Oiltanking have been actively developing and marketing the offshore VLCC loading project,” he said. A site has been selected near Freeport, about 60 miles south of Houston, for the onshore facilities. A 40-mile offshore pipeline would be constructed to fully load up to one VLCC a day.

“Supply access will be critical to the success of this facility, and we plan superior connectivity to key supply basins and storage facilities,” Jarvis said. “It's clearly a competitive environment when it comes to developing export options, but we are confident with our position.”
Enbridge with its partners has the capabilities “to construct and operate this facility. There is strong interest from a broad base of potential customers...Our plan is in place that targets an in-service day as late 2021 or early in 2022.”

CEO Al Monaco said the Colt system would allow Enbridge to get “closer to export markets physically...It's a good opportunity” to “get closer to the last mile, if you will, to export infrastructure capability…”

Enbridge has an estimated $5 billion of opportunities along the Gulf Coast, with 2.3 million b/d of pipeline capacity serving the region. It has export capability and docking opportunities, with the VLCC an adjunct to its expansion plans.

According to preliminary plans unveiled by the operator, the Colt project would be fed in part by the Phillips 66-led Gray Oak Pipeline, as well as the Seaway Crude Pipeline Co. LLC system, a 50-50 joint venture between Enbridge and operator Enterprise Products Partners LP.

Enbridge disclosed during the investor conference that it is buying a 22.75% stake in Gray Oak, which is under construction to deliver light crude beginning late next year from the Permian Basin and Eagle Ford Shale to the Sweeny hub near Houston, about 21 miles northwest of Freeport, as well as a new terminal in South Texas near Corpus Christi.

With onshore oil production escalating, finding efficient ways to move supply overseas has led other operators to lay plans for VLCCs. Fully loading a VLCC in the United States now requires multiple ship-to-ship transfers, aka STS, which are performed in lightering zones out to sea. The Louisiana Offshore Oil Port, aka LOOP, can accommodate fully loaded VLCCs in its lightering zone.

Among plans for VLCCs now on the drawing board is a South Texas onshore oil export terminal envisioned by the Port of Corpus Christi and The Carlyle Group, which could be up and running by 2020. The port city is about 178 miles south of Freeport.

Another proposed project, unveiled last August by commodity trader Trafigura Group Pte Ltd., would be a deepwater port near Corpus that also could load oil supertankers. The firm has applied for a permit through Trafigura US Inc. subsidiary Texas Gulf Terminals Inc.

Also in the mix is Enterprise Product Partners LP, which in July said it was considering an oil export terminal to expand deliveries overseas that would be capable of loading VLCCs. The site has not been officially disclosed, but in April Enterprise purchased a 65-acre waterfront site on the Houston Ship Channel to serve as the next phase of expansion at an existing terminal, which has two docks, dredging infrastructure and land to expand marine terminaling capabilities. Front-end engineering and design has begun, with initial work underway for permitting.

 

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