CORPUS CHRISTI, TEXAS--Booming U.S. oil exports have set off a scramble to build Gulf Coast ports to handle more than 3 million barrels per day in new supplies expected over the next five years.
Of seven proposed oil-export projects, nowhere is the opportunity greater or the competition more fierce than in Corpus Christi, Texas, where three firms are vying to open the state's first deepwater port. Commodities trader Trafigura has taken an early lead with a planned offshore facility that has an easier path to regulatory approval and faces fewer objections from environmentalists.
Its chief competitor - a partnership of investor Carlyle Group and the Port of Corpus Christi to build an onshore port - has responded by petitioning regulators to kill Trafigura's project. Port lobbyists have cited past criminal allegations involving the firm in other countries and potentially "catastrophic" environmental impacts.
Rising demand for new ports follows a 2015 decision by the U.S. Congress to lift a 40-year ban on crude exports after advances in drilling techniques sparked a rapid rise in domestic shale production - especially in Texas. The United States had been the world's top oil buyer for decades, and its port infrastructure was built to import rather than export.
Now, surging exports threaten to overwhelm existing ports as U.S. production is projected to hit 12 million barrels per day (bpd) this year, up from 9.35 million in 2017. "We've got a wave of oil headed toward the coast," said Jeremiah Ashcroft III, chief executive of Lone Star Ports LLC, the Carlyle-backed company formed to develop its Corpus Christi project.
Only one U.S. facility, the Louisiana Offshore Oil Port, can fully load supertankers capable of carrying 2 million barrels. The Corpus Christi port - the closest to the most prolific shale fields in Texas - exports less than 1 million bpd, and its harbor is too shallow to fully load supertankers.
The market ultimately may support more than one new deepwater port, but the first firm to build near Corpus Christi will have the best shot at cutting long-term deals with producers expected to ship an estimated 2.1 million bpd to the region through new pipelines set to open this year. "Right now, there's only enough room for one project," Ashcroft said.
Carlyle plans a $1 billion port to handle 1.4 million bpd. Trafigura, which has not disclosed its planned investment in the port, would handle much less, at 500,000 bpd. But Trafigura's operation would siphon off revenue from the Port of Corpus Christi and Carlyle's project because Trafigura would serve shippers offshore, before they reach the harbor.
Carlyle declined to make an executive available for an interview and referred questions to Lone Star. Trafigura said in a statement that its port would leave room for other projects because it would handle only a portion of the expected new oil flows.
A third competitor, pipeline operator Magellan Midstream Partners LP, plans an export terminal on the Corpus Christi harbor, near Carlyle's proposed site. But Magellan faces a roadblock because port officials last year agreed to work exclusively with Carlyle. Magellan said in a statement that it has not decided whether to build the project.
Companies including Kinder Morgan Inc, JupiterMLP and Tallgrass Energy have also proposed offshore ports along the Gulf Coast.
