Magellan Midstream Partners LP (NYSE: MMP) on Nov. 1 became the latest company to join a crowded group looking to build an oil export terminal on the U.S. Gulf Coast designed to load supertankers.
U.S. oil exports are expanding rapidly, but volumes are constrained because the country’s shores have limited capability to load giant vessels that can carry about 2 million barrels of crude oil.
Numerous companies—including private equity firm Carlyle Group and commodities merchant Trafigura, and other pipeline operators—have already announced proposals, in what is quickly becoming a crowded field of those looking to finance and break ground on a project.
Currently the U.S., unlike top exporters such as Saudi Arabia, has limited capacity to fully load Very Large Crude Carriers, or VLCCs, forcing companies to do ship-to-ship transfers in deep waters, which is costly and inefficient.
Magellan said it is considering a potential export terminal on Harbor Island in Corpus Christi, Texas, capable of loading VLCCs.
Earlier this week, Carlyle said it was looking to build in partnership with the Port of Corpus Christi, which would need substantial dredging to deepen its waterways. Other Texas and Louisiana projects have been proposed by companies including Swiss-trader Trafigura AG and pipeline operators Enterprise Products Partners LP (NYSE: EPD) and Tallgrass Energy LP (NYSE: TGE).
To be sure, Magellan warned that it would take “considerable time” before a final decision on the project is made.
“It’s very competitive ... We’ve got significant interest to date, but we’ll see how it plays out,” said CEO Michael Mears.
U.S. crude production hit a record 11.346 million bbl/d in August, and exports surged to as much as 3 million bbl/d in June.
Magellan also said the total cost of its proposed crude oil pipeline from the Permian Basin in West Texas to the Gulf Coast is expected to be about $2 billion with Magellan’s share being about $500 million. Permian production has outpaced pipeline capacity, prompting several new lines to be announced.
Separately, Magellan said volumes on the BridgeTex pipeline, which moves crude from Midland and Colorado City, Texas, to East Houston averaged over 395,000 bbl/d during the third quarter compared with about 280,000 bbl/d a year earlier.
Recommended Reading
Which Haynesville E&Ps Might Bid for Tellurian’s Upstream Assets?
2024-02-12 - As Haynesville E&Ps look to add scale and get ahead of growing LNG export capacity, Tellurian’s Louisiana assets are expected to fetch strong competition, according to Energy Advisors Group.
Is Grayson Mill the Next Bakken Domino to Fall After Chevron-Hess?
2024-01-31 - As E&Ps look to bulk up outside of the Permian Basin, EnCap-backed Bakken player Grayson Mill Energy is reportedly exploring a sale valued around $5 billion.
EQT Ups Stake in Appalachia Gas Gathering Assets for $205MM
2024-02-14 - EQT Corp. inked upstream and midstream M&A in the fourth quarter—and the Appalachia gas giant is looking to ink more deals this year.
Global Partners Buys Four Liquid Energy Terminals from Gulf Oil
2024-04-10 - Global Partners initially set out to buy five terminals from Gulf Oil but the purchase of a terminal in Portland was abandoned after antitrust concerns were raised by the FTC and the Maine attorney general.
Ohio Oil, Appalachia Gas Plays Ripe for Consolidation
2024-04-09 - With buyers “starved” for top-tier natural gas assets, Appalachia could become a dealmaking hotspot in the coming years. Operators, analysts and investors are also closely watching what comes out of the ground in the Ohio Utica oil fairway.