Search on TFTC
Texas Faces Setbacks in Deepwater Oil Export Plans

Texas Faces Setbacks in Deepwater Oil Export Plans

Apr 24, 2024

Texas Faces Setbacks in Deepwater Oil Export Plans

Earlier this month, the United States Maritime Administration (MARAD) granted the first license for a Texas deepwater port to the Sea Port Oil Terminal (SPOT), marking a significant development in the U.S. oil export infrastructure. This approval is a highlight in an industry where multiple crises throughout the 2020s have altered trade flows and delayed project advancements.

Four projects were initially planned to expand offshore Texas's capacity for oil exports. However, only SPOT, owned by Enterprise Products Partners, has secured a deepwater port license. It is designed to facilitate the loading of very large crude carriers (VLCCs) at rates of up to 85,000 barrels per hour. This platform would be situated about 30 nautical miles off Brazoria County, Texas, and would connect directly to Enterprise’s Houston ECHO terminal, giving access to a variety of crude oil grades.

Despite the potential boost SPOT could provide to U.S. crude exports, the project's progression is uncertain. It lacks long-term customer commitments and partners to substantiate a final investment decision. Chevron, initially backing the project, has withdrawn, citing delays in license approvals. Similarly, Enbridge, a Canadian pipeline company, has retracted its interest in acquiring a stake in the project.

The rationale for Texas offshore ports has been undermined by a combination of factors, including a slowdown in U.S. crude oil production growth and a pivot in export destinations. U.S. crude exports have seen a dramatic shift towards Europe, especially after the Russian invasion of Ukraine and the subsequent sanctions on Russian oil. This shift has led to a decrease in demand for supertanker ports like SPOT, as European markets often utilize smaller tankers.

According to the U.S. Energy Information Administration (EIA), the Netherlands emerged as the primary recipient of U.S. crude oil exports in 2023, averaging 652,000 barrels per day (bpd). Overall, U.S. crude exports to Europe outpaced those to Asia and Oceania, with an average of 1.8 million bpd. This uptrend is partly due to the inclusion of West Texas Intermediate (WTI) crude in the Dated Brent pricing, pushing Europe's demand for U.S. crude.

Despite the record levels of U.S. crude oil exports in recent years, the EIA projects a deceleration in production growth. This projection, coupled with the changing dynamics of global oil trade, casts doubt on the immediate need for Texas's supertanker port capacity. As Chevron's vice president of Midstream, Colin Parfitt, stated, there is currently less demand for large ship capacity, aligning well with the existing U.S. export facilities.

While the approval of SPOT's deepwater port license is a milestone, the project's future, as well as the broader expansion of Texas offshore ports, hangs in the balance.

OilPrice Article


Current Block Height

Current Mempool Size

Current Difficulty