The oil tanker Afrodite departs Corpus Christi, Texas bound for Aruba. (photo: Lorne Matalon)
CORPUS CHRISTI, Texas -A surge in production in the Permian Basin of west Texas, already the nation’s highest producing oilfield, is extracting more crude oil than refiners in Texas can handle. But now, producers in the Permian have new outlets for that oil with economic implications hundreds of miles away from the flatlands of west Texas.
“This is not a bubble, this is real growth,” said vessel traffic controller Mike Stineman as he scanned real time navigation charts indicating vessel traffic at the port. Radio chatter between vessels, the Coast Guard and the Vessel Control Center provided a non-stop soundtrack of the the pulse of the port.
A longtime ban on US crude exports was lifted last year. And today, the port of Corpus Christi is positioning itself to become America’s main energy export hub. Stineman said it is too simplistic to say the lifting of the ban, ushered in as the Obama administration ended, is solely responsible for increased shipping activity at the the port.
Increased demand in Mexico for US energy is also in play, Corpus Christi is an established refining center, and the largest natural gas liquefaction plant in the US is slated to be built here. However Stineman said the lifting of the ban is stimulating significant activity at the port.
“There was so much on land that it was like,’ We need to sell this stuff because we can’t keep it anymore. We don’t have storage space for it anymore,’ Stineman explained. “So the lifting of the ban broke the logjam.”
Oil production in the Permian Basin of West Texas is thriving. But like Stineman says, you have to have a place to store or send that oil. Major players in US energy are making bets on Corpus Christi’s export potential. The port has awarded a 30-year lease to Maverick Terminals Corpus to build a transcontinental pipeline from the Texas coast to Mexico.
Other major energy industry players are investing in new dockage and expanded terminal operations, among them Exxon Mobil, Occidental and San Antonio-based NuStar, a pipeline and terminal operator.
“We see Corpus as probably the most important piece of a new export world for US production,” said Danny Oliver, NuStar’s Senior VP in charge of Business Development in an interview at NuStar corporate headquarters in San Antonio.
“Clearly US crude prior to the lifting of the ban was a frustrated commodity,” said the port’s Chief Operating Officer, Sean Strawbridge. Today one pipeline connects the Permian Basin to the port. At least six have been proposed.
“Not all of those will likely be built,” Strawbridge continued. “But even if half of those get built, it will quadruple the amount of Permian (crude oil) coming into Corpus Christi.”
The port is projecting the addition or 5000 new direct, indirect, induced or related jobs by the end of 2017 at a port in a part of Texas that’s been hard hit by the recent energy downturn.
“In my world, the more ships the better,” said Kevin Miller, a senior captain who works for a Latin American oil company with dockage at the port.
The tankers he works with are part of a fleet now bringing Texas crude from Corpus Christi to 25 countries — China, South Korea and the UK among them. Today the big issue for the Corpus port is its channel on the Gulf of Mexico. It’s not deep or wide enough to handle today’s high volume vessels called VLCCs when they are fully loaded. VLCC stands for Very Large Crude Carrier.
Currently, as is the case in other energy focused ports such as Houston, smaller tankers take crude from the port to VLCCs anchored offshore. A project to expand the channel at Corpus Christi has been authorized by Congress three times, but funding has been stalled.
Events in foreign oil markets like Iraq and Venezuela are also driving exports from here. Iraq’s oilfields are under threat from a number of actors including ISIS, while violent standoffs between the opposition and government forces in Venezuela continue.
“With the uncertainty of the int’l crude market, it seems like there’s going to be a lot more demand for the crude that’s in Texas,” said Chris Vratil, Director of Operations for NuStar at the port.
New or expanded dockage is under construction in part to ship out the light, sweet crude from Texas that’s prized by foreign refiners. They mix it with a heavier, more viscous oil to produce gasoline and other refined products.
“I’d Iove to see oil go to about 65, 70 a barrel, said Vratil. “And I’d love to see what happens then.” Even at current prices though, around $50 per barrel, oil in the Permian Basin continues to flow. The industry’s leveraging this port’s strategic location to move that oil to foreign markets.