A consortium comprising two Texan oil pipeline companies and a subsidiary of a German oil storage company have pooled both plans and resources to invest $1.8 billion into building the United States' largest deepwater oil import terminal off of the coast of Texas, the companies declared on Monday.
The Texas Offshore Port System, or T.O.P.S., is a joint venture between Houston companies Enterprise Products Partners LP and TEPPCO Partners LP, as well as Oiltanking Holding Americas Inc., a subsidiary of Marquard & Bahls AG. The trio who will all share equal joint ownership of the import terminal will cement the Gulf Coasts’ ongoing role as a major refinery hub.
In the markets, on Monday, Enterprise rose $0.36 (1.3%), to $28.62 in New York Stock Exchange composite trading. Teppco gained $0.13 to $30.44, a total of 1.4% above its 5-year low on August 7.
The offshore port and onshore storage, which is set become operational in 2010, will include more than 5 million barrels of crude storage capacity and 160 miles of pipeline that can accommodate up to 1.8 million barrels per day (bpd). The yield will be double the import capacity of the Louisiana’s Offshore Oil Port (L.O.O.P.), currently the only oil terminal in the US capable of handling the biggest tankers carrying shipments from West Africa and the Persian Gulf.
The plan relies squarely on maintenance of the status quo: oil produced and imported overseas with oil refined on the Gulf Coast. The unveiling of the project comes at a time when the outlook for US refining is grim - the project's principal proponent has even labelled the sector a slow-growing one. But, the companies behind the new port, which will take delivery from tankers 36 miles offshore, say it’s development will put a new price tag on an old business.
“With refining capacity along the upper Texas coast continuing to expand, T.O.P.S. offers a comprehensive solution for ensuring reliable access to supplies of crude oil,” says Michael Creel, President and CEO of Enterprise Product Partners. “This project should provide refiners with cost savings, operating efficiencies and access to additional supplies beyond the Gulf Coast region,” he added.
Houston refiner Motiva Enterprises LLC and Exxon Mobil have both signed long-term contracts to lease around 40% of the port’s capacity for a committed total volume of about 725,000 bpd.
Plans for the port and the size of its capacity were primarily driven by environmental rules that are making it harder and costlier for refiners to ship crude through the Houston Ship Channel and other waterways, according to Carlin Conner, Chairman of the new joint venture's management committee, and President and Chief Executive of Oiltanking's North American subsidiaries.
The idea was not compete with new pipelines being planned to carry oil to Gulf Coast refineries from Canada's tar sands region.
Mr. Conner added: “The project would also provide our customers with access to an efficient and reliable crude oil delivery system for years to come.”