Magellan Midstream Partners LP is not having problems securing customers for its Houston-area Seabrook Logistics LLC crude export terminal even as international buyers push for U.S. export facilities to accommodate the biggest tankers most commonly used in oil trade.
"The interest for long-term contracts at Seabrook, which is a Suezmax facility, are very high," CEO Michael Mears said during the Barclays CEO Energy-Power Conference in New York on Sept. 5. "There doesn't appear to be a concern for parties to make long-term contracts to facilities that don't have [very large crude carrier] access."
Magellan executives have acknowledged the midstream partnership's interest in loading very large crude carriers, or VLCCs, a move that would help buyers that want to use larger vessels to cut freighting cost. But those projects are expensive and fraught with regulatory uncertainty, Mears said at the conference.
"We, at one point, probably six months ago, were doing initial estimates. ... We've kind of shelved that," he commented.
Magellan and its joint venture partner for Seabrook, LBC Tank Terminals LLC, in August announced an expansion of the facility. The duo plans to build nearly 700,000 barrels of additional storage and a new Suezmax dock and about 400,000 barrels per day of dock capacity to the facility, which operates 2.4 million barrels of storage and 300,000 bbl/d of dock capacity. If fully built out, Seabrook could have up to 5.5 million barrels of storage capacity and dock capacity of at least 700,000 bbl/d.
The Louisiana Offshore Oil Port owned by Marathon Pipe Line LLC, Shell Oil Co. and Valero Terminaling and Distribution Co. can accommodate VLCCs, and the the Port of Corpus Christi and the federal government are investing $327 million in a dredging project to widen and deepen the Corpus Christi channel enough to load VLCCs by 2021. But with West Texas oil production booming, companies are racing to build new Gulf of Mexico deepwater facilities as crude shipments abroad increase.
North American pipeline heavyweight Enterprise Products Partners LP announced in July that it will develop a crude export terminal offshore Texas that will be able to fully load VLCCs. Swiss commodities trading firm Trafigura Group Pte. Ltd., meanwhile, filed an application with the U.S. Maritime Administration and the U.S. Coast Guard on Aug. 6 to build and operate its Texas Gulf Terminals Project that could also accommodate the tankers. Private midstream company JupiterMLP LLC is also looking to construct an offshore VLCC-loading facility off the coast of Texas.