Corpus Christi, other USGC hubs competing for raw export kegs in 2021

The Port of Corpus Christi broke volume records in late 2020 as it accounted for more than 55% of the market share of all US crude oil exports. However, these barrels are expected to sink somewhat in 2021 as competing ports recover and global oil demand remains relatively weak.

Sean Strawbridge, CEO of Port of Corpus Christi, said in an interview with S&P Global Platts that he was confident that the burgeoning port hub will remain the country’s raw exporting artery and that he was extremely optimistic about possible growth. The big question he has no answer to is whether there will be a bigger surge in 2022 or 2023 when the U.S. shale industry finally recovers from the coronavirus pandemic.

“How soon are we going to get out of this COVID cocoon?” Said Strawbridge. “We can only expect more volumes to come to the Corpus Christi port.

“Crude oil is like water. It will find the path of least resistance, and the port of Corpus Christi is the path of least resistance to the quantities of crude oil. “

Corpus crude oil exports rose from just under 500,000 b / d at the beginning of 2019 to more than 1.3 million b / d at the end of the year to the market leader in the country when new long-haul pipeline connections in the Permian Basin were put into operation. After a decline of 1.5 million b / d in February 2020, the pandemic reduced the volume to 1.2 million b / d in April before reaching a new record high of more than 1.9 million b / in December. d increase.

“Our resilience is really at the expense of other gateways that are just not that efficient,” said Strawbridge, noting that Corpus has only been a “sleepy little haven for decades” until now.

For the full year 2020, corpus averaged 48% of all US crude oil exports, according to the US Energy Information Administration.

Export competition

Since the ongoing pandemic and the producers in Perm maintain capital discipline despite rising crude oil prices, the volume of crude oil exports in the port of Corpus Christi will drop below 1.5 million b / d in 2021 to only an annual average of 1.3 million b / d.

This comes with increasing competition from rival Houston Ship Channel, which led the US in crude oil exports until late 2019, and Louisiana offshore oil port, which is still the only hub that can fully charge VLCCs. without the need for offshore lighter services offshore.

This year, the Port of Houston is expected to benefit from the completion of the ExxonMobil-led 1.5 million b / d Wink-to-Webster crude pipeline, which is the last major Permian pipeline to be fully online. And LOOP will benefit from the Capline Reversal Pipeline Project, which will send volumes of crude oil back south to Louisiana.

On the flip side, Phillips 66 canceled the Red Oak Pipeline project that the Port of Corpus Christi was counting on to finally connect South Texas to the benchmark crude oil storage hub in Cushing, Oklahoma. Strawbridge said he continues to hope that a similar project will be built at some point. Corpus is still dependent on the volumes Permian and Eagle Ford Shale for the time being.

“Corpus Christi is not really going to catch up with the incremental growth that is coming in the near future,” said Kendrick Rhea, energy analyst at East Daley Capital. “That growth will move back to Houston.”

Much of what is beneficial to Houston is the two biggest Perm players ExxonMobil and Chevron, which have ties to the Houston area. ExxonMobil will have Wink-to-Webster, while both major oil companies have their major refining and petrochemical centers in the Houston area. Chevron is also selected as an anchor customer for the Sea Port Oil Terminal project by Enterprise Products Partners, named SPOT, to export crude oil from the Houston coast.

While SPOT is indefinitely delayed and potentially subject to stricter oversight by the Biden government during the pandemic, Rhea continues to consider SPOT to be the only upcoming offshore crude oil export project with a greater than 50% chance of completion.

The main customers of the Port of Corpus Christi have historically been the local oil refineries, but now crude oil exporters Moda Midstream and NuStar Energy have moved up to the top two. Corpus Christi benefited from the recent completions of the long-haul Permian pipelines EPIC, Cactus II and Gray Oak, as well as terminal expansions and new facilities such as the new South Texas Gateway Terminal from Buckeye Partners.

“We’re still seeing COVID printing around the world,” said Strawbridge. But in the longer term, “the slate producers will always have a place in the international markets.”

Dutch connection

A new benefit Strawbridge now has is a new Memorandum of Understanding announced on February 25 between the ports of Corpus Christi and Rotterdam as Northwestern Europe relies more on US imports due to declining domestic oil production.

The agreement with Europe’s largest port enables the two global crude oil centers to coordinate and improve their global maritime activities together, including reducing their carbon footprint through technological and logistical improvements.

Strawbridge hopes the port will benefit by creating more business and efficiency for its mutual customers. First and foremost, however, it is about an exchange of information and ideas.

“The Netherlands is the EU’s California when it comes to environmental sustainability,” said Strawbridge.

While the Port of Corpus Christi emphasizes how it relies on renewable energy to run its operations, Strawbridge envisions that they will work together on new carbon sequestration, hydrogen and emissions reduction projects.

Other things like working on technology to improve nighttime and foggy tanker navigation would help move more barrels faster.
Source: Platts