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Moda Midstream launches Ingleside VLCC berth upgrades

Houston — Moda Midstream has commissioned upgrades to Berth 2A at the Moda Ingleside Energy Center near Corpus Christi, Texas, allowing for VLCCs to load at the berth at a rate of 80,000 b/h, the company said Friday.

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The complex can currently load VLCCs to 1.2 million-1.25 million barrels at the current 47 feet draft mean lower low water, with the expectation that the facility will be able to load 1.5 million barrels once the Corpus Christi channel has been dredged to 54 feet draft MLLW.

The current loading capacity allows for one large Aframax or Suezmax lightering operation, which is more economical in comparison to a typical lightering operation which requires four Aframax vessels of 500,000 barrels or three heavy lifting Aframaxes of 700,000 barrels. The hope is that once the facility can load up to 1.5 million barrels on a VLCC, the cost of lightering will be further reduced, due to a shorter load period as well as the ability to take smaller Aframaxes.

As part of commissioning of the berth upgrades Friday, the company started to partially load the Aral, its fourth-ever VLCC at the Moda complex. Oxy booked the Aral to make a USGC-UK Continent or Mediterranean run at $4.05 million, according to the S&P global Platts fixture log.

"With today's commissioning of our upgrades to Berth 2A, we now have the U.S Gulf Coast's most efficient crude export loading rates," Moda CEO Bo McCall said in a company statement accompanying the commissioning event.

Moda Midstream has moved forward in additional expansions at the Ingleside facility, which will improve berthing efficiency and double the current loading rate capacity to 160,000 b/h.

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The Moda Ingleside Energy Center currently has the ability to store about 2.1 million barrels of oil, with a project currently underway to allow for an additional 10 million barrels of crude oil storage, expected to be complete by the second quarter of 2020.

McCall said new pipelines, including the Gray Oak, Cactus II and EPIC lines, will have the capacity to carry 700,000 b/d to 1 million b/d of crude to bring a total of about 3.5 million b/d to the Coastal Bend area.

Considering about 1 million b/d in local refinery capacity, some 2.5 million b/d will be available for export from the Corpus Christi area.

Moda's Ingleside facility currently receives WTI crude from the Permian Basin off the Cactus pipeline, McCall said. When additional pipelines startup later this year, he said the facility will be able to receive five crude grades -- WTI, WTI Light WTI condensate and crude and condensate from the Eagle Ford shale play.

RECENT INCREASE IN USGC VLCC INQUIRY

The race to expand to VLCC-capable infrastructure on the USGC is happening at a time when strong export demand coupled with favorable economics has created an uptick in VLCC activity over the past few months, with VLCCs not only making their typical voyages east but also to Europe.

There have been at least 25 VLCCs booked out of the USGC in January, six of which were set for or included options for discharge at Europe. This compares to only six VLCCs fixed out of the USGC in December 2018.

Charterers have opted to take VLCCs to Europe from the USGC, a route that typically sees Suezmaxes and Aframaxes, as VLCCs were as much as half the cost of taking an Aframax vessel on the voyage in mid-January.

Freight for VLCCs heading east out of the USGC saw unprecedented levels in the third quarter of 2018, averaging lump sum $8.1 million, and has fallen since into January but still holding firm at historically high levels of an average lump sum $6.9 million.

--Catherine Wood, catherine.wood@spglobal.com

--Laura Huchzermeyer, laura.huchzermeyer@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com