Oct. 19–Pipeline companies are rushing to expand or build new pipelines to move Permian Basin crude and natural gas to the Gulf Coast so the production can find its way to consumers.
When that new takeaway capacity comes online beginning in late 2019 and into 2020, that is expected to eliminate the current bottlenecks. But for a company like Trafigura, a trading and logistics company with an office in downtown Midland, that’s only part of the solution.
“Some believe the problem will be solved by building more pipelines. But you’re just moving the glut,” said Corey Prologo, director of Trafigura North America and director of the company’s Texas Gulf Terminals Inc., in a phone interview.
“Everyone is under the impression pipelines will solve the problem, but if there is not enough export capacity at the other end, you’re not solving the glut,” he said. “All that oil will be getting to the coast, then it has nowhere to go. We’re attempting to solve the coastal bottle neck.”
Texas Gulf Terminals has filed an application for a new offshore deep water port facility comprised of a single-point mooring buoy system that will allow Very Large Crude Carriers to load cargo safely directly and fully. This will eliminate the “double handling” of crude oil via ship-to-ship transfers, which will reduce the risk of spills and emissions. The SPM system will be unmanned and controlled from an onshore control center, he said.
The project is similar to the Louisiana Offshore Oil Port and the El Segundo Offshore Oil Terminal in California, Prologo said.
“It is a huge plus for West Texas producers,” he said, because putting Permian Basin crude on the biggest ships in the world “moves the most amount of oil out of Texas, allowing producers to produce more Texas oil.”
Very Large Crude Carriers can carry up to 2 million barrels per voyage. Prologo pointed out that, since the country is adding production at the rate of 1.1 million barrels of crude per day annually, the country will soon need export capacity of 5 million barrels per day.
“We’re only exporting 2.3 million barrels a day because of constraints at the water,” he said. “Over the next few years, we’ll double the need to export West Texas crude to international customers. That oil is very attractive to international refiners. On a cost and volume basis, U.S. producers are the best in the world. We can increase production of that desirable crude.”
Trafigura has not disclosed the location of the project, an expected timeline or estimated cost. But Prologo said the project is in keeping with the company’s previous investments in the U.S., and especially in Texas.
“The first step was to facilitate and sponsor the largest takeaway pipeline, which is the Cactus II, to move West Texas crude to the Gulf Coast, move it through the refineries there and for export. We saw Texas production rising and no way to move it on the water.”
With crude exports a significant part of operators’ growth plans, he said that, “If you can’t move oil efficiently to the water, production growth can’t come to fruition.”
Prologo said the company is in the permitting phase.
“Once the permits are approved, it will be 18 to 24 months from receipt of the permits,” he said. “We are working with the relevant agencies. The process is working as planned.”
Mella McEwen is the Oil Editor and covers the latest business and energy news. You can read more from her here. |firstname.lastname@example.org|
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