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Enterprise to bring in second VLCC at Texas City port: executive

Houston — Enterprise Product Partners will bring in a second VLCC at its Texas City port terminal by the middle-to-third week of June, following a recent successful test run to berth mega tankers at its Texas City Port facility on the Houston Ship Channel, a senior company executive said Wednesday.

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"Overall, our test run was successful and there are some minor modifications required," Executive Vice President for Strategy Bill Ordemanntold S&P Global Platts on the sidelines of Hart Energy's Midstream Texas conference in Midland.

The required modifications will not getin the way of Enterprise's plan now to fill crude into the VLCC, he said.

"During our recent trial run we tested our systems and no crude was loaded. This time our target is to light load up to 1.2 million-1.3 million barrels, out of the tanker's total capacity of 2 million barrels," Ordemann said.



Simultaneously, Enterprise will also load an Aframax with the remaining 700,000-800,000 barrels and tow out both vessels to the lightering zone in the Gulf of Mexico, where crude from the Aframax will be transferred to the VLCC for exports, he said.

In late April, Enterprise brought in VLCC Nave Quasar to test its loading arms and water depth at the port to determine up to what level it could load the super tanker given the 43 feet depth of the ship channel.

A VLCC requires water depth of at least 73 feet for full loading.

"What we did the last time was to test and see if a VLCC would fit at our terminal. Our results indicate it was a success," Ordermann said while addressing the conference.


CARGO DESTINATION


Ordemann did not indicate where the crude for the planned June loading will be destined. But he said typically Enterprise loads out the vessel after it has struck a deal with a trading firm.

"Loading a VLCC would imply those barrels are destined for Asia or Europe. For our part, what we want to demonstrate as a midstream solution provider is we will be ready to light load on a regular basis from our Texas City Port facility as buyers seek a reduction in loading costs and more efficiency," he said.

Ordemann did not indicate what the cost savings may be, stating "such figures are still being worked out" as ports in Texas currently build out new capacity to facilitate exports of light US barrels to global markets.

Sandy Fielden, an analyst with Morningstar, said in a research note late May a VLCC loading could result is savings of up to 75 cents/barrel.

US exports, which averaged 591,000 b/d in 2016 (after the ban on exports was lifted in December 2015), rose to an average 1.12 million b/d last year, Fielden said, adding they have increased further so far in 2018 with a weekly record 2.6 million b/d being shipped in the second week of May.

Cost effective and 'regular' loadings of VLCCs could potentially open up 1.5 million b/d of exports out of the US Gulf Coast over the coming few years, as a growing number of light barrels from the Permian Basin seek global markets, Greg Hass, a director of integrated energy with Stratas Advisors, said at the event.

New markets were opened up last year for US producers with 87,000 b/d and 100,000 b/d being sent to the Netherlands and the UK, respectively. In addition, crude exports to China and South Korea averaged 204,000 b/d and 57,000 b/d, Hass said.

Enterprise is well positioned to handle incremental exports out of the Houston Ship Channel from its four docks that has a capacity of loading 1.44 million b/d, Ordemann said.

No comments were immediately available from the company, but its total crude exports were just above 800,000 b/d in May, according to information on the Enterprise website.

--Ashok Dutta, ashok.dutta@spglobal.com
--Edited by Derek Sands, newsdesk@spglobal.com