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Energy Transfer plans VLCC-capable crude export terminal near Nederland, Texas

Highlights

Developer sees advantage in supply diversity from Canada, Bakken, Permian

Joins seven other deepwater ports competing to move next wave of US exports

Five VLCC-capable projects have filed applications for federal permits

Washington — Energy Transfer is looking to enter the crowded field of proposed US deepwater crude export terminals capable of fully loading VLCCs, with a project that connects to the company's 28-million-barrel Nederland, Texas, terminal, executives said Thursday on the company's second-quarter earnings call.

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Mackie McCrea, chief commercial officer, said the project would stand out from competitors because of the vast amount and diversity of supply that collects at Nederland, which he called the largest above-ground oil storage in the country.

"If you look at Nederland and you look at the amount of barrels that come in -- pipelines that come from Canada, from Cushing, from West Texas -- every major area comes into Nederland," McCrea said.

On the market side, McCrea said: "We just have to be competitively priced. We're working on our costs, and we're negotiating with potential shippers. We feel real good about how we're progressing."

McCrea said Energy Transfer would soon file an application with the US Department of Transportation's Maritime Administration, and the project would take at least 2 1/2 years.

Energy Transfer owns the 570,000 b/d Dakota Access crude pipeline that moves about 40% of Bakken production. It aims to increase capacity to 1.1 million b/d by late 2020, feeding more Bakken crude to Midwest and Texas Gulf Coast refining and export markets.

Seven other companies have proposed deepwater oil ports across the Gulf of Mexico to move the next wave of US crude exports, although not all of the proposed capacity will be needed.

Five of the projects have filed federal applications: Trafigura's Texas Gulf Terminal and Phillips 66's Bluewater Texas Terminal off Corpus Christi; Enerprise's Sea Port Oil Terminal off Houston; and Enbridge's Texas COLT and Sentinel Midstream's Texas GulfLink off Freeport.

The Louisiana Offshore Oil Port is only Gulf of Mexico port able to fully load VLCCs without lightering from smaller vessels. It started exporting crude in February 2018.

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US CRUDE EXPORTS FALL

US crude oil exports fell to the lowest level in 10 months last week, as arbitrage economics have tightened, and on heightened concerns of a slowdown in demand.

The slowdown comes amid an expected ramp up in exports driven by rising supply and pipeline capacity linking Permian crude production to the US Gulf.

US crude exports averaged 1.865 million b/d in the week ending August 2, down over 700,000 b/d week on week, and nearly 1 million b/d lower than the year-to-date average, according to Energy Information Administration data.

After averaging around 3.3 million b/d in June, US exports have begun to taper off over the past few weeks, with the 4 week moving average of US exports falling 400,000 b/d from just two weeks prior.

China, India, South Korea and Singapore have been taking fewer barrels over the past two weeks, cFlow data shows.

-- Meghan Gordon, meghan.gordon@spglobal.com

-- Edited by Jeff Mower, newsdesk@spglobal.com

2nd Annual North American Crude Oil Exports Summit | October 28-30, 2019 | Houston, Texas

The summit sets a unique global agenda, inviting international buyers and North American producers, midstream participants and ports to examine the changing dynamics of US crude quality, connectivity, pricing and new markets.

Find out more