The Port of Corpus Christi is a Beehive of Activity

Panorama aerial view of Corpus Christi Harbor Bridge
Panorama aerial view of Corpus Christi Harbor Bridge with row of oil tanks and wind turbines farm in distance. A through arch bridge crosses the Corpus Christi Ship Channel

I visited the Port of Corpus Christi in late August for the first time this year, and I was honestly stunned by the level of activity taking place there. From the dredging of the main channel to construction activities taking place in and around Portland and Ingleside and from the development of a deepwater port facility at Harbor Island to the building of Harbor Bridge replacing one built more than half a century ago, the area is just a beehive of activity.

The various construction and expansion projects are all designed with a single goal in mind: To ensure the Port of Corpus Christi (PortCC) is ready and able to handle the influx of Permian crude oil headed its way as a collection of new, high-capacity crude pipeline projects go operational in the coming months. In fact, two of those projects — the EPIC and Cactus II systems — began shipping their initial volumes during August.

When I caught up with PortCC CEO Sean Strawbridge earlier in the month, he was not happy about reports indicating that the area’s various expansion and improvement efforts are somehow lagging, and that the myriad facilities and projects he oversees will be caught unable to handle the new, bigger volumes.

“Nothing could be further from the truth,” he told me. “We are not ‘leaning on the rake,’ if that’s what people are thinking. We’ve got dredgers in the water; they’ve been working pretty much all of this year to deepen and widen the ship channel. From a deepening standpoint, we will have the deepest port channel in the entire U.S. gulf.”

That highly-publicized project to deepen and expand the PortCC main channel is the centerpiece project in Strawbridge’s world right now. But it is far from the only crucial piece of the complex puzzle of key projects that are proceeding simultaneously in this busy part of the world.

“We have existing dock projects that are in various stages of expansion right now, and we also have new docks being built,” Strawbridge pointed out. “We are building-out to have nominal (peak) capacity of in excess of 5 million barrels per day (bpd). That would be the capacity for crude exports alone.

“There is also a tremendous amount of new storage being built. Cushing, Oklahoma (America’s largest crude oil storage facility today) right now is around 75 million barrels of capacity — it would not surprise me if we end up approaching the 60-65 million barrel range, which would make us, as I like to call it, the ‘Cushing of the Coast.'”

All of this new capacity to receive, store and export bigger volumes of crude is much-needed. In a webinar conducted in June, industry advisory firm Wood Mackenzie estimated that demand for export capacity at PortCC alone will climb as high as 2.5 million bpd by mid-2021, and will remain at or above that level for years to come. The firm forecasts that “at peak production, the Corpus Christi region will account for 56% of total U.S. crude shipments abroad.”

As a point of comparison, the U.S. Census Bureau estimated that America set a new record by averaging 3.16 million bpd of crude exports during the month of June. That’s for the entire country.

Strawbridge told me he is confident that PortCC will be able to work through the byzantine federal budget processes to secure the remaining funding needed to ensure the main channel expansion project does not experience any work stoppages. The project consists of four separate contracts that must be bid out and obtain their own budget earmarks, and PortCC itself is paying for what Strawbridge estimates will ultimately be about 34% of the total $400 billion+ project budget. That self-funding piece gives PortCC the flexibility to accelerate its own funds into the process to keep work proceeding in the event of any federal budget delays.

Expansion projects are also proceeding rapidly in various satellite locations in the surrounding area. At Ingleside, which lies across Corpus Christi Bay from the main PortCC facilities, Moda Midstream is rapidly expanding its already-existing facility where the Cactus II pipeline terminates. Residing on what once was Naval Station Ingleside, Moda Midstream is expanding the loading facility to make it capable of fully loading so-called VLCCs, the largest class of crude oil tankers. When fully-loaded, VLCCs are capable of carrying up to 2.1 million barrels of oil. That facility will also ultimately have about 12 million barrels of associated storage capacity. The expanded facility will be fully operational by the end of this year.

Ingleside will also be home to the South Texas Gateway Terminal managed by Buckeye Partners LP, a joint venture between Marathon, Phillips 66 and Buckeye. That project, with an estimated daily export capacity of 800,000 bpd, will be partially operational by the end of this year and fully operational by mid-year 2020. The Gray Oak Pipeline system, scheduled to be in service by the end of 2019, will bring Permian Basin crude to this terminal for export.

PortCC itself is partnering with the Carlyle Group and Lone Star Ports in another VLCC-capable project at Harbor Island, which lies across the Intracoastal Waterway from Port Aransas. Plans are for the channel to be dredged to a depth of 75 feet up to Harbor Island, which will enable the facility there to fully load VLCCs without any offshore lightering operations.

PortCC also announced in July that it will partner with Phillips 66 on its Bluewater Texas Terminal, a planned VLCC-capable offshore loading terminal to be located northeast of Corpus Christi about 21 miles out into the Gulf of Mexico. “I think we’re the only port authority in the state that’s partnering with one of these buoy operators,” Strawbridge told me. “We like Phillips 66 as an operator. They are experienced in running single-point mooring facilities — they’ve run one off of the east coast of the UK in a place called Hull, where they have a refinery, since 1971.”

Once completed in mid-2022, assuming all goes to plan, the Bluewater Texas Terminal would have the capacity to export about 1.56 million bpd.

But that is far from all, as Strawbridge told me:

“Plains All American has a dock that is being commissioned. It’s a brand-new dock that will have 1.6 million barrels of storage capacity behind it. That dock hasn’t moved a barrel yet.

“Right across from that, we’re about to break ground on a new dock for Mercuria, which already has an existing dock that also has not been used yet. That dock is ready to go — it’s for the Pin Oak pipeline which is a joint venture between Mercuria and Dauphine. So, they’re breaking ground on a second dock in addition to that one, and it’s already permitted and ready to proceed.

“Nustar added some capacity — they just put a new 30-inch line across the Nueces Bay. That connects into the Cactus II line that will carry 300,000 bpd of new volume.”

The scope and scale of it all is frankly breathtaking, and remember: All of this activity, and much more, is taking place in and around PortCC. It does not account for the growing number of additional expansion and new-build projects also proceeding at or near the Texas ports of Brownsville, Freeport, Port Arthur and Houston.

Strawbridge explains his sense of urgency since coming to PortCC a few years ago as a response to market realities: “What has happened over the last few years is that we’ve had this growing recognition that the next bottleneck, if we don’t do something about it, could be the coastal infrastructure. So, as the pipelines have been getting permitted and installed, we want to make sure we don’t become the next bottleneck.

“That’s why all these offshore buoy projects have been coming about, because there has been a lack of certainty about when these harbor channels can be dredged. But If you have a choice between an offshore buoy and an onshore terminal, you’re going to pick the onshore terminal every time if you can get the same draft.

“It’s safer; it’s lower risk; it’s higher availability, better utilization, better efficiency, better productivity, better security, all of that.”

The bottom line in the Corpus Christi area is obvious: As recently as early 2019, it was reasonable to be concerned about a potential looming export bottleneck developing as all the new Permian takeaway pipelines begin to come online. But today, thanks in large part to the efforts taking place in and around PortCC, Permian and Eagle Ford Shale oil producers can now feel certain their rising production volumes will continue to have access to international markets.

So, if you have visited Corpus Christi in recent months, marveled at all the construction and expansion activity taking place there, and wondered what the hubbub was all about, now you know.

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at [email protected]