1 8 Billion Offshore Port To Supply Texas Refinery Growth

Plans for an offshore oil port in the Gulf of Mexico off of Texas are rapidly moving forward after decades of literal pipedreams. Three companies have announced plans to jointly build a facility that will handle about 18% of the nation’s oil imports and help feed the appetite of expanding refineries along the Gulf Coast.

The $1.8-billion project’s design isn’t technically challenging, but the schedule is, says Dennis Jahde, vice president of offshore engineering for Enterprise Products Partners L.P., Houston, the company overseeing construction and procurement for the port. The goal is to have the port operational in 2010, when a 325,000-barrel-per-day expansion of Motiva Enterprises’ Port Arthur, Texas, refinery is expected to come online. Motiva and ExxonMobil Corp. have committed to taking a total of 725,000 bbl per day from the port.

“We look at this as a big piece of the project,” says Rick Strouse, project integration manager for the Port Arthur refinery. But the company has alternative means of getting crude if the port isn’t operating on time, he adds.

The offshore oil port will consist of a platform and two buoys in 115 ft of water, connected by two 42-in. pipelines to onshore storage tanks with a capacity of up to 5.1 million bbl. The design is state-of-the-art, says an industry expert, who asked not to be identified.

Detailed engineering on the port is being completed, Jahde says. Enterprise, TEPPCO Partners L.P., Houston, and Oiltanking Holdings Inc., Germany, are each putting up one-third, or about $600 million each, to build the port. Expenditures in 2008 will be about 7% of the budget, followed by 34% in 2009, 50% in 2010 and 9% in 2011.

Oil Field Development Engineering, LLC, Houston, is designing the offshore platform and the onshore terminals; Cronus Technology, Houston, is designing the pipelines; and Project Consulting Service, Metairie, La., is designing the onshore pipelines. Bids to build the port platform will be let soon. Construction should begin by mid-2009, Jahde says.

The platform, however, will be built at onshore shipyards because no work can begin at the site, 36 miles off Freeport, Texas, until the U.S. Maritime Administration issues the project a deepwater port license. The process for such a license takes at least a year. The group plans to apply for the license by the end of the year, Jahde says.

“Obviously getting a deepwater port license is always a challenge,” Jahde says. Some previous applications for deepwater ports for offshore liquefied-natural-gas terminals were denied because of environmental concerns. Tankers requiring lightering services deliver 2.5 million of the 3.9 million bbl per day of refining capacity for Texas Gulf Coast refineries, according to the U.S. Energy Information Administration. The Texas offshore port is an environmental plus because it will reduce air pollution by eliminating the need for lightering vessels to offload crude from tankers that are too big to come into port, Jahde says.

The three companies are confident the port will be approved, and the JV has already purchased steel for the pipeline and the platforms, Jahde says. The cost of the steel is 15% to 20% of the cost of the entire project, he adds. A cost contingency of 12.5% will cushion the project against escalation in the current volatile market.

The idea for the Texas port first came up three decades ago, about the same time the concept for the nation’s first offshore port, the Louisiana Offshore Oil Port, arose. That port, 18 miles south of Port Fourchon, La., came online in 1981 and can handle up to 1.1 million bbl per day. Two official commissions created by the Texas legislature have studied the possibility of a similar port since the 1970s, but without tangible results.

The Texas project was finally cemented when Oiltanking, which was working on a similar project, hooked up with Teppco and Enterprise, says Jim Schepens, Oiltanking’s Houston-based vice president of marketing and sales. The terminal facilities—3.9 million bbl in Texas City, Texas, and 1.2 million bbl near Port Arthur, Texas—will be huge compared to most of the company’s other terminals, he says. By comparison, Oiltanking’s Houston terminal holds about 400,000 bbl, Schepens says.

http://enr.ecnext.com/coms2/summary_0271-53430_ITM

Business Financial Services

1 8 Billion Offshore Port To Supply Texas Refinery Growth