August 18, 2008
Plans for Texas offshore oil port
Enterprise Products Partners L.P. (NYSE:EPD), TEPPCO Partners, L.P. (NYSE:TPP) and Oiltanking Holding Americas, Inc. have formed a joint venture to design, construct, own and operate a new Texas offshore crude oil port and pipeline system to facilitate delivery of waterborne crude oil to refining centers along the upper Texas Gulf Coast.
They say the initiative will provide an efficient alternative to offshore lightering and inland dock operations.
The Texas Offshore Port System ("TOPS") project would include an offshore port, two onshore storage facilities with approximately 5.1 million barrels of total crude oil storage capacity, and an associated 160-mile pipeline system with the capacity to deliver up to 1.8 million barrels per day (BPD) of crude oil. System capacity could be expanded with construction of additional offshore facilities.
The project involves construction of a deepwater port located approximately 36 miles offshore from Freeport, Texas, and an onshore distribution and storage system. The deepwater port is designed with two single-point mooring buoys. Located in about 115 feet of water, the buoys will be able to offload crude oil at rates up to 100,000 barrels per hour. A subsea pipeline will connect the buoys to the onshore distribution system near Freeport. Utilizing directional drilling techniques to minimize beach impact, the TOPS pipeline system would run from the offshore port shore crossing to Freeport and extend along the Texas Gulf Coast to Texas City, Texas, connecting to a 3.9 million barrel crude oil storage facility. From there, the pipeline would connect to existing crude oil pipeline systems.
A separate but complementary component would involve construction of a 75-mile pipeline extending from Texas City to its terminus at a planned storage facility with 1.2 million barrels of crude oil capacity near Port Arthur, Texas. The storage tanks are designed to connect to various refineries and other facilities via pipelines. This pipeline system would have the added capability of delivering waterborne and offshore crude oil from existing Texas City docks and storage facilities to all Port Arthur/Beaumont area refineries.
Affiliates of Enterprise, TEPPCO and Oiltanking each have a one-third ownership in the new joint venture and expect to invest approximately $600 million each in the initiative, which, subject to obtaining certain regulatory approvals and permits, is scheduled to begin service in the fourth quarter of 2010.
Development of the project is supported by long-term contracts with Motiva Enterprises LLC and an affiliate of Exxon Mobil Corporation, which together have committed a total volume of approximately 725,000 BPD.
Planned and expected refinery expansions along the upper Texas Gulf Coast are anticipated to add approximately 425,000 BPD of capacity beginning in 2010
TOPS is designed to allow operations 24 hours per day without restrictions on movements and vessel size that limit most ship channels. TOPS would be able to accommodate the largest vessels which can carry approximately 3 million barrels of crude oil. The location of TOPS is also designed to avoid delays and risks related to fog, navigation hazards and channel closures on coastal waterways.