Texas Operators Stand to Gain from US Crude Exports
12.21.2015 - NEWS

December 21, 2015 [Gulf News] - New York: Enterprise Products Partners LP, Kinder Morgan Inc. and Magellan Midstream Partners LP may be early winners as the US starts unlimited exports of crude oil.


The companies own pipelines and terminals on the coast, the closest export point for crude from the Permian Basin and the Eagle Ford formations in Texas. They move crude and refined products through the ports of Houston and Corpus Christi, which shipbroker MJLF & Associates identified as key origination points for exports as the ban is lifted.

“Initially, exports would likely originate from Texas, supplying barrels from the Gulf of Mexico or onshore production,” Bloomberg Intelligence analyst Gurpal Dosanjh said. Texas “has the most developed infrastructure for exports compared with Louisiana.”

Enterprise operates petroleum export plants along the Houston Ship Channel and at Freeport, Texas, 35 miles south of Houston.

Kinder Morgan operates the Battleground Oil Specialty terminal on the channel. Magellan owns pipelines that connect the fields in the Eagle Ford shale region to a marine terminal it operates in Corpus Christi.

Enterprise is “well positioned to take advantage of crude oil export opportunities without any significant expenditures or delays,” spokesman Rick Rainey said in an email. Kinder Morgan spokeswoman Melissa Ruiz said the company supports lifting the ban because it would help producers and enable swaps of light crude from Texas for heavier grades from other countries.

Terminal operators won’t need more than six months to make changes to meet any swell in foreign demand for US-produced crude, Harold “Skip” York, principal analyst at Wood Mackenzie in Houston, said Thursday by phone. Companies like Kinder and Enterprise could convert their existing refined-product export operations to handle crude, he said.

The US Gulf Coast already ships out gasoline, diesel and Canadian crude. The US exported more than 2.2 million barrels a day of finished petroleum products from PADD 3, which includes Texas and Louisiana, in the 12 months ended September, according to Energy Information Administration data.

US crude exports won’t exceed 1.3 million barrels a day without more infrastructure, MJLF said. The largest tankers won’t be able to go to ports in Europe or through the Panama Canal to Asia. But two ships being built by Tsakos Energy Navigation will be able to traverse the canal.

Tsakos is building the 50,000-metric-ton vessels on request from major oil companies to export US crude to the Far East, Chief Executive Officer Nikolas Tsakos said in an interview in New York Friday. Construction started in March and the vessels should be ready to carry crude and products by September, he said.

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