The surge in US oil exports has led to a frantic race to build Gulf Coast ports capable of handling more than 3 million barrels a day of new supplies over the next five years.
Of the seven proposed oil export projects, nowhere else or competition are as fierce as in Corpus Christi, Texas, where three companies are trying to open the first deep-water port of the state.
Trafigura, a commodities trader, quickly took the lead with a planned offshore installation that achieves regulatory approval and faces fewer objections from environmentalists.
Its main competitor – a partnership between the Carlyle Group investor and the port of Corpus Christi for the construction of a shore port – reacted by asking the supervisory authorities to kill the Trafigura project. Port lobbyists have reported previous criminal allegations involving the company in other countries and potentially "catastrophic" impacts on the environment.
The growing demand for new ports follows a decision by the US Congress in 2015 to lift a ban on crude oil exports for 40 years after advances in drilling techniques led to a rapid increase in domestic shale production, especially in Texas. The United States had been the world's largest buyer of oil for decades, and its port infrastructure had been built to import rather than export.
Now, rising exports threaten to overwhelm existing ports, with US production expected to reach 12 million barrels a day this year, up from 9.35 million barrels in 2017.
"We have a wave of oil headed to the coast," said Jeremiah Ashcroft III, managing director of Lone Star Ports LLC, the company supported by Carlyle and created to develop its Corpus Christi project.
A single US facility, the Louisiana Offshore Oil Port, can fully load tankers capable of carrying 2 million barrels. The Port of Corpus Christi – the closest to the most prolific shale fields in Texas – exports less than 1 million bpd / d, and its port is too shallow to fully accommodate supertankers.
The market could ultimately support more than one new deepwater port, but the first company to be built near Corpus Christi will have the best chance of entering into long-term agreements with producers who should ship about 2, 1 million bpd in the region through new pipelines opened this year.
"At the present time, there is not enough room for a project," said Ashcroft.
Carlyle plans a $ 1 billion port to treat 1.4 million barrels a day. Trafigura, which has not disclosed its planned investment in the port, would treat much less, 500,000 b / d. However, Trafigura's activities would divert revenues from the Corpus Christi and Carlyle port project, as it would serve shippers off the coast before they reach the port.
Carlyle declined to make a manager available for an interview and asked Lone Star questions. Trafigura said in a statement that its port would leave room for other projects as it would only deal with part of the expected new oil flows.
A third competitor, the pipeline operator Magellan Midstream Partners LP, is planning an export terminal in the port of Corpus Christi, near the site proposed by Carlyle.
But Magellan faces a roadblock as port officials agreed to work exclusively with Carlyle last year. Magellan said in a statement that he had not decided to build the project yet.
Companies such as Kinder Morgan Inc., JupiterMLP and Tallgrass Energy have also offered ports off the Gulf coast.
CHARGES OF BRAZIL
Last October, Carlyle said she could open her facility by the end of 2020. But that assumes her dredging plan to accommodate the giant tankers will not require a review. environmental assessment, requested by the opponents and may take two years.
While Carlyle and the port tried to overcome these obstacles, port lobbyists asked regulators to stop the Trafigura project. In a letter dated August, the port law firm asked the US Coast Guard and the Maritime Administration to reject Trafigura's claim, citing "criminal history".
Baker Wotring LLP's letter indicated the trader's 2006 guilty plea for the sale of a US oil from Iraq that Trafigura had falsely claimed to have been authorized as part of a United Nations humanitarian aid program. At the time, US companies were not allowed by the government to buy Iraqi oil except under the program.
After the regulators rejected the port's request, his law firm in December lodged corruption charges filed earlier in the same month by Brazilian prosecutors against two former Trafigura executives. The firm asked the regulators to suspend Trafigura's work until the charges "have been thoroughly investigated".
Trafigura said in a statement that his management had no knowledge of undue payments to employees of the Brazilian oil company Petrobras. Trafigura did not comment on the port's law firm citing its guilty plea regarding Iraqi oil sales.
Last month, five lawmakers in the Corpus Christi region petitioned Texas Governor Greg Abbott to oppose Trafigura's claim for environmental reasons, citing the risk of "catastrophic spills of crude oil" and excessive atmospheric emissions ".
Federal rules require state governors to sign offshore ports. Abbott has made no decision, said a spokesman.
Ashcroft, of Lone Star, said shore terminals were safer than offshore projects because oil spills are more easily cleaned at ports than in open waters. Trafigura said it had chosen to go offshore to make sure that supertanker tankers could load cargo safely and efficiently and that its application would be reviewed by more than 30 government agencies.
Carlyle is vital to the construction of the Corpus Christi Port crude oil export trade. The port authorities began asking the federal government to flush its port 28 years ago, but Congress has only recently approved $ 59 million, a fraction of the needs.
"We are not 28, we have two," said Sean Strawbridge, managing director of the Corpus Christi port authority, referring to his port preparation schedule for new oil flows.
Last year, port officials tried to relaunch dredging by issuing bonds for $ 217 million. This money will allow him to start flirting at a 54-foot draft – not deep enough for supertankers.
If the port of Trafigura is approved, it could deal with the port of Corpus Christi. Port revenues could fall by about 12 percent, Morningstar Inc., an investment researcher, said, which could hurt its government or Carlyle dredging funding efforts.
In October, Carlyle agreed to pay an undisclosed amount to cover the dredging necessary to obtain a 75-foot draft at the port front to meet the needs of the giant bankers.
& # 39; ENVIRONMENTAL DISASTER & # 39;
Ecologists favor offshore ports over what they see as the detrimental impact of dredging ports.
Port Aransas Conservancy, recently formed in southern Texas, argued that the Carlyle Plan would endanger the nesting areas of sea turtles, dump silt on nearby islands and threaten shellfish reaching estuaries by the channel of the ship.
Trafigura responded to environmental concerns related to its offshore activities by proposing to create a tunnel under sand dunes and wetlands to install a pipeline rather than digging trenches in ecologically sensitive areas.
"Dragons are still a dredging problem" as they bring in salt water, said Jayson Hudson, Regulatory Supervisor at the US Army Corps of Engineers, who oversees the procurement of permit for the Carlyle project. He called Trafigura's horizontal drilling plan a "good option to avoid permanent impacts".
Dredging the port, on the other hand, would have far-reaching consequences, said John Donovan, president of Port Aransas Conservancy.
"We are totally against what we consider to be an environmental disaster that port plans for Harbor Island would entail," he said.
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