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Buckeye starts crude exports from Corpus Christi's South Texas Gateway terminal

Highlights

South Texas Gateway will export up to 800,000 b/d

Additional construction phases will continue through early 2021

US crude-exporting capacity rising despite weaker demand

Houston — Buckeye Partners said it started loading the first cargoes of crude oil for export on July 16 from its brand-new South Texas Gateway terminal at the Port of Corpus Christi.

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While US crude exports have slipped amid the coronavirus pandemic, the Port of Corpus Christi became the nation's top crude-exporting hub late last year.

The Aframax Minerva Libra began loading 789,484 barrels of crude destined for Northwest Europe, according to data from Kpler, a data intelligence company, and S&P Global Platts.

"The milestone reached by Buckeye Partners on loading its first vessel at the South Texas Gateway Terminal is monumental, particularly as our nation's economic recovery from COVID-19 gets underway," said Port of Corpus Christi CEO Sean Strawbridge in a statement. "The oil and gas industry has gone through a period of unprecedented demand destruction that is only now beginning to show signs of reversing. The loading of this vessel with crude from the Permian Basin is a sign that this economic downturn is changing direction."

Operations are expected to ramp up as additional phases of construction are completed by the first quarter of 2021. When fully operational, the terminal will be able to export 800,000 b/d from two deepwater docks. The terminal will have 8.6 million barrels of storage capacity with the ability to expand to about 10 million barrels, according to Buckeye. A third deepwater dock also could be added.

Houston-based Buckeye owns 50% of the terminal with Phillips 66 Partners and Marathon Petroleum each own 25%.

"This world-class facility will play a critical role in serving global energy markets from South Texas and the Port of Corpus Christi," said Khalid Muslih, Buckeye president of global marine terminals.

Growth in the time of coronavirus

Amid the pandemic, US crude exports in 2020 have fallen from a high of 4.38 million b/d for the week ending March 13 down to below 2.5 million b/d for the, according to the US Energy Information Administration, although crude exports ticked back up to 2.54 million b/d last week, making the US a net exporter for the first time since the week ended May 8. Still, analysts project crude exports to further dip in the coming weeks as buyers will likely first turn to the crude barrels still sitting in floating storage.

There initially were plans to also build a South Texas Gateway crude pipeline from the Permian to Corpus, but that project was quashed as competing projects such as the EPIC crude oil pipeline and the Gray Oak Pipeline moved forward, both of which were recently completed.

As for the growth at the Port of Corpus Christi, the Pin Oak Terminal recently started shipping crude oil this spring from a new dock, and Moda Midstream expanded its Ingleside Energy Center.

Because VLCCs can still only partially load at the port and then fill up offshore through lightering, the port is still supporting plans by Phillips 66 and Trafigura to build a deepwater, crude-exporting terminal offshore of Corpus Christi. However, because of the pandemic, the construction on the Bluewater terminal project have been delayed at least until next year.

First cargo

The Minerva Libra likely is headed to Europe because that's the region where the arb appears open, one market source said to S&P Global Platts on July 16.

Indeed, arbitrage economics for WTI crude have improved in recent days into Northwest Europe. Against local Forties crude, WTI MEH arbitrage into Rotterdam was at a 71 cents/b incentive on July 15, according to the Platts Crude Arbflow calculator, up from just 4 cent/b on average so far in July.

A late August-loading WTI FOB cargo out of Ingleside, Texas, was heard offered on July 15 at October ICE Brent minus $1.60/b for a 750,000 barrels cargo.