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.
Based on crude oil export projections, port officials say they expect to add 5000 direct and indirect jobs in 2017.
“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 U.S. 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 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 U.S. is slated to be built here. However, Stineman said the lifting of the ban is stimulating significant activity at the port.
Lorne Matalon
New or upgraded docks are under construction at the port.
“There was so much (crude oil) 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 is thriving. But producers need to have a place to store that oil…or send that oil. Major players in U.S. energy are making bets on Corpus Christi’s export potential.
The Port Authority 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 U.S. production,” said Danny Oliver, NuStar’s Senior Vice President in charge of Business Development, in an interview at NuStar corporate headquarters in San Antonio.
“Clearly U.S. 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 in to Corpus Christi. ”
That in turn implies the creation of new jobs at a port in a part of Texas that’s been hard hit by the recent energy downturn. Kevin Miller is a senior captain who works for a Latin American oil company with dockage at the port.
“In my world, the more ships the better,” Miller said.
The tankers he services are part of a fleet now bringing Texas crude from Corpus Christi to 25 countries — China, South Korea and the U.K. among them.
Today the biggest challenge for the Corpus port is its channel on the Gulf of Mexico. Currently, it is not deep or wide enough to handle today’s high volume vessels called VLCCs, or Very Large Crude Carrier. Right now, 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, while violent standoffs between the opposition and the government forces in Venezuela continue.
Lorne Matalon
Chris Vratil, Director of Operations at the port for NuStar Energy.
“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 geography to move that oil to foreign markets.
What’s Next:
- Some crude is likely to reach the port of Corpus Christi from North Dakota’s Bakken oil field, now that the Dakota Access Pipeline is operational. Protests against that pipeline has inspired others in west Texas.
- The surge in production in the Permian has also led to a surge in oil thefts.
- During the recent oil price downfall, some oil producers in the Permian survived better than others.
