Corpus Christi Bay has turned into America’s energy export epicenter after the federal government legalized the export of crude oil in 2015. David Uberti and Beoit Morenne explain the area’s growth in The Wall Street Journal, writing:
Corpus Christi is the closest deep-draft port to the Permian Basin in West Texas and New Mexico, America’s hottest oil field. Crude extracted from shale rock there, prized by overseas refineries for its light, sweet quality, trades at a premium to many other grades.
That oil was confined stateside as the shale boom unleashed unprecedented U.S. production growth. But after Washington nixed decades-old export restrictions in 2015, companies scrambled to build out pipelines to Corpus Christi, a South Texas city of about 320,000.
Various companies have since constructed storage tanks in Corpus Christi to hold tens of millions more barrels of oil near the water. Cheniere Energy is expanding a plant that can liquefy natural gas for export. Since 2020, dredgers have been at work deepening the port’s ship channel and inner harbor to 54 feet from 47 feet currently, a more than $680 million operation that will allow many tankers to fill up close to capacity.
“You can’t just build those facilities overnight,” said Kent Britton, the Port of Corpus Christi’s interim chief executive.
Ensuing growth in crude shipments has outpaced other launch points in Texas and Louisiana largely because of the economics of shipping. Exporters that operate from Houston-Galveston and the main Port of Corpus Christi funnel shipments to smaller classes of tankers, which either carry cargoes abroad or ferry them to 1,100-foot supertankers anchored offshore in a dayslong process.
But across Corpus Christi Bay, in the small town of Ingleside, Texas, oil terminals at a former Naval base are big enough that those massive ships can fill up about half of their 2 million barrels of capacity from shore.
“You can pretty much load your million barrels in 24 hours,” said Lois Zabrocky, chief executive of International Seaways, which operates 13 so-called very large crude carriers.
Five tugboats then guide half-full VLCCs several miles out to sea, where smaller tankers top them off for delivery to refineries in Europe, Asia or elsewhere.
That streamlined loading process can pare the price of shipments compared with elsewhere on the Gulf Coast. Analysts said such differences became particularly crucial last year after Russia’s invasion of Ukraine whipsawed energy markets and sent shipping costs skyrocketing.Calgary, Alberta-based Gibson Energy bought one of the Ingleside terminals in June for $1.1 billion, an investment that Chief Executive Steven Spaulding said will pay off regardless of whether Permian production growth continues. His rationale: Ingleside’s efficiency will entice traders, even if it means drawing oil away from across Corpus Christi Bay.
“It doesn’t matter to our terminal,” Spaulding said.
Pipelines from the Permian to Corpus Christi are running at about 90% capacity, according to East Daley Analytics, a level at which traders might begin sending more crude toward Houston for refining or shipment abroad.
The midstream energy company Enbridge has responded by announcing an expansion of its pipeline to Corpus Christi by 200,000 barrels a day. Other companies have proposed environmentally contentious plans for multibillion-dollar deepwater terminals that would allow VLCCs to load up fully in the Gulf of Mexico.
Read more here.
