Enterprise's Sea Port Oil Terminal may be operational within next three years

While US crude exports continue to rise, a recent court decision on Enterprise Product Partners' Sea Port Oil Terminal marked a step forward for the project as the company aims for operating status for the project by late 2026 or early 2027.

The need for enhanced crude export capabilities has come into question recently amid rising production levels, but the jury remains out on when export capacity will be expanded as a string of projects remain on the backburner.

Late last week, the 5th US Circuit Court of Appeals upheld the US Department of Transportation's approval of the project, dismissing claims brought forward by environmentalists that the federal government had failed to meet the standards of the National Environmental Policy Act or the Deepwater Port Act.

The midstream energy services operator originally expected SPOT to be operational by 2025, but the project remains behind in receiving a US license for construction or a final investment decision, with a revised operating status set two to three years out.

Located about 35 miles off Brazoria County, Texas, in the Gulf of Mexico, the deepwater port is an offshore platform that aims to optimize VLCC loading and expand crude storage capacity as global demand pulls US production.

The terminal would allow access to up to 7 million b/d of supply from major crude basins and could load a VLCC in a single day. Fully loading a VLCC would avoid delays and costs related to reverse lightering, becoming a popular alternative to traditional methods.

Currently, the Louisiana Offshore Oil Port is the only US Gulf port capable of fully loading VLCCs, which can carry roughly 2 million barrels of crude. Other terminals, such as Enbridge's Ingleside, can partially load VLCCs.

Rising US crude production continues to toe the line of exporting capacity, with S&P Global Commodity Insights analysts expecting output to reach 14 million b/d by the end of 2024 and 14.6 million b/d by year-end 2025.

Of that, the Permian Basin will remain a primary driver, with output forecast to reach nearly 6.7 million b/d by December 2024 and around 7.2 million b/d by December 2025.

Alongside the growing production levels, total US crude exports are expected to reach an annual average record of 4.4 million b/d in 2024, rising to 5 million b/d in 2025 on the back of steadily rising output.

For the week ended March 29, the US exported 4.02 million b/d of crude and, which is expected to soften to 3.9 million b/d for the week ended April 5, according to S&P Global analysts.

Lagging behind SPOT, Phillips 66 and Trafigura's joint project Bluewater, Energy Transfer's Blue Marlin offshore port and Sentinel Midstream's GulfLink export terminals remain in the preliminary approvals phase as they have yet to see a final environmental impact statement, a final investment decision or a record of decision.

Enterprise Product Partners declined to comment.