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US marks one year of VLCC oil exports from LOOP as new ports line up


LOOP loads 11 VLCCs in first year of direct exports

60% of LOOP exports went to India, 23% to China

US Gulf sees wave of deepwater oil port proposals

Washington — The US has been directly loading and exporting VLCCs for one year as of this week from the Louisiana Offshore Oil Port, the only US port able to fully load the supertankers without lightering from smaller vessels.

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LOOP has picked up speed in its first year of exports, from one ship every month or two, to two VLCCs loading within a few days of each other in early December.

The port has also picked up future competitors -- eight of them. Analysts expect at least two of the proposals to get built by 2022, likely one each offshore greater Houston and Corpus Christi.

With most of the growth in Permian oil production in the coming years destined for export markets, midstream companies are racing to build additional deepwater terminals capable of loading 2 million barrels of crude onto a VLCC within a day.

Gulf Coast dock capacity would rise to 7 million-8 million b/d if two VLCC terminals are added, said Sandy Fielden, director of oil and products research at Morningstar Commodities and Energy.

"So far dock capacity has handled over 3 million b/d and probably can do 5 million b/d in a pinch today," he said.

Fielden projects Permian crude production expanding by 2.3 million b/d by end-2021, from about 4 million b/d in Q1 2019.

US oil production crossed 12 million b/d for the first time in January and is on track to exceed 13 million b/d by March 2020, with most of the growth coming from the Permian Basin, according to the Energy Information Administration.

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LOOP loaded 11 VLCCs in its first year of direct crude exports, all of which headed to Asia. About 12.5 million barrels of oil went to India, 5 million barrels to China, and 2 million barrels each to Japan and South Korea, according to data from Platts trade flow software cFlow.

The Saudi-flagged VLCC Lulu had the quickest turnaround. It arrived at LOOP on December 4, loaded 2.1 million barrels of crude and sailed on December 7 toward the east coast of India, cFlow data showed.

The Liberia-flagged Khurais VLCC called twice at LOOP, in late August and early December, loading 2 million barrels each time and sailing to Kochi, India.

The wave of competitors looking to join LOOP in direct VLCC exports in the next few years have proposed far more capacity than the US is expected to produce. So even the developers admit that not every proposed port will get built.

Enbridge, a backer of the Texas Crude Oil Loading Terminal offshore Freeport, Texas, only sees demand for one of the three proposed terminals in that area. The joint venture with Kinder Morgan and Oiltanker filed a federal application in January and aims to start up in late 2021 or early 2022.

"We've got a line of sight to some pretty significant customers, and we're doing our darnedest to get that project to the point where it's a secured investment," Guy Jarvis, Enbridge's president of liquids pipelines, said in the company's Q4 earnings call February 15.

Enterprise Products Partners said successful export terminals will need price transparency and access to plenty of crude supply. The company's Sea Port Oil Terminal offshore Brazoria County, Texas, filed a federal application last month and is targeting service in 2022.

"Our terminal will have all the necessary components, supply aggregation, open connectivity and price transparency," CEO Jim Teague said on Enterprise's Q4 earnings call January 31.

Mike Mears, CEO of Magellan Midstream Partners, said the successful terminals will need significant storage near the dock to load VLCCs, "but a lot of people can do that." He said it will ultimately "come down to who can do it the cheapest, who has supporting infrastructure and supply to the facility to make it work and who has the customer relationships to secure the contract."

Tallgrass thinks its Plaquemines Liquids Terminal near the mouth of the Mississippi River distinguishes itself from Corpus Christi options because of the 3.2 million b/d of refining capacity just upriver. "If the boat doesn't show or a hurricane is in the Gulf or there is some other weather event or geopolitical event that occurs, and boats don't make it to the dock, the barrels have other places to go," COO Bill Moler said.

Trafigura filed an application to the US Maritime Administration for its Texas Gulf Terminals proposal in July, and Enterprise and the Texas COLT joint venture filed applications in January. The federal reviews are expected to take at least a year, after which the outlook for expanding the Gulf Coast's oil export capacity will come into sharper focus.

-- Meghan Gordon,

-- Edited by Richard Rubin,

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