A Houston-based midstreamer is looking to squeeze in another oil export project on the Texas coast between the massive Houston and Corpus Christi ports that would move Eagle Ford Shale and Permian Basin supply overseas.
Max Midstream announced the ambitious plan designed around the Seahawk Pipeline and Terminal in Port Comfort in Calhoun County. The system, purchased from Oaktree Capital, terminates under the purview of the Calhoun Port Authority (CPA).
Point Comfort, with around 750 residents, is on the east side of Lavaca Bay in the Victoria metropolitan area, about 92 miles north of Corpus, the country’s leading oil export destination, and 145 miles south of the massive Houston Ship Channel.
The CPA is served by the Matagorda Ship Channel and the Gulf Intracoastal Waterway. Max inked a lease agreement in May to use about five acres on CPA’s North Peninsula.
Max’s pipeline system could connect up to 20 million bbl a month to a “revitalized terminal” at the CPA. Exports are set to begin when the first phase is completed late this year, with a second phase scheduled to ramp up by 2023.
“At a time when the oil and gas market is down, this project and partnership reflects proof that Texas is bouncing back and will remain resilient in being the world’s leader in oil production,” said Max President Todd Edwards. He estimated that more than 1,000 jobs could be created during the project’s construction.
An economic impact study indicated the project could create 474 direct jobs and another 598 construction related jobs across the state over the next 10 years, Edwards said. During the process, Max plans to invest up to $1 billion overall.
Under a public/private partnership with the CPA, Max plans to invest $360 million to finance deepening and widening the port by 2023. In the interim, Max secured a zone to perform reverse lightering, which would allow crude to be exported via very large crude carriers, or VLCCs.
“Max Midstream will initially load Panamax ships and reverse lighter to larger ships in its lightering zone,” management said.
Once the port is deeper and wider, Aframax and Suezmax ships would be able to load at the port, “making it a viable option for any exporter seeking a port other than Houston or Corpus Christi,” Max management said.
“The key to exporting Texas oil is transporting the commodity at an economic price from the sources to the ports, either through Houston or Corpus Christi ports, which are typically at or near full capacity with congestion,” management noted. The ability to export oil via the port could be a “game-changer, as it will open a third option…”
Seahawk has agreements to interconnect its nearby Edna terminal with Kinder Morgan Crude and Condensate. Future expansions are planned to connect with the Gray Oak Pipeline and Victoria Express Pipeline systems.
In late August Phillips 66 Partners began testing support for additional crude transportation capacity for Gray Oak from the Permian that would terminate in Victoria. EnLink Midstream Partners LP operates the Victoria Express system, which moves oil from the Eagle Ford.
“By November of 2020 we will have 1.5 million bbl of storage built at Edna and 600,000 bbl of storage at the port and the existing Seahawk pipeline, with the ability to export up to 4.2 million bbl a month,” Edwards said. “By the time the project is fully complete in 2023, we will have 9 million bbl of storage at Edna and 6 million bbl at the port, with multiple pipelines to export crude through the port.”
Max’s midstream system is to have nine 16-inch loading arms and three eight-inch barge loading arms at the CPA.
“By developing the Seahawk Terminal at the port, we will be able to offer a deepwater terminal with little congestion and the ability for producers to get their product to the port at a very reasonable price,” Edwards said.
CPA director Charles R. Hausmann said the expansion could “transform our port into a major oil exporting center, and it will transform our area with new jobs and new growth.”
To complete the project, Max has hired Swiss-based SGS SA for guidance on supply chain management, metering/custody transfer, laboratory design and management solutions. SGS would oversee the design of laboratories at the export terminal at the port and in Edna.
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