Texas Petroleum Terminals Prepare for Buildouts as Market Points to Shaky Recovery
Researched by Industrial Info Resources (Sugar Land, Texas)--Global oil markets are looking toward an uneasy recovery in demand. Consumption of gasoline, diesel and jet fuel are at their highest levels in more than a year, according to World Oil, and analysts believe the Biden administration's recently passed $1.9 trillion economic rescue package will drive consumer activity. But the road back to a pre-COVID-19 economy will be long and bumpy, which means oil suppliers in Texas--the busiest U.S. hotspot for the commodity--will need to be prepared for any sudden changes to the outlook. Industrial Info is tracking nearly $10 billion in active petroleum-related terminal projects in Texas.
The U.S. Department of Energy (DOE) is preparing life-extension projects at some of the facilities that comprise the U.S. Strategic Petroleum Reserve (SPR), the world's largest supply of emergency crude oil. The SPR, which includes 63 underground salt caverns across four locations in Louisiana and Texas, can store more than 700 million barrels of sour and sweet crude oil and maintains a minimum reserve of 500 million barrels. The Bryan Mound facility near Freeport, Texas, which is the largest SPR site, and the Big Hill facility near Winnie, Texas, which is the newest, are set to begin life-extension projects next spring.
The Big Hill site features 14 salt dome storage caverns with a storage capacity of 171 million barrels of crude oil, while the Bryan Mound site features 20 caverns with a capacity of 254 million barrels. Upon completion, currently expected at the end of 2025, the sites would have their lives extended by about 25 years. For more information, see Industrial Info's reports on the Big Hill and Bryan Mound projects.
Enterprise Products Partners LP (NYSE:EPD) (Houston, Texas) accounts for some of the largest projects along the Texas Gulf Coast, including the 4.2 million-barrel Oyster Creek Crude Terminal in Freeport, Texas, which is planned to feature seven tanks, each with a capacity of 600,000 barrels. Enterprise also is planning storage tank additions at its Seaway Station in Texas City, Texas, which is designed to support the 500-mile Seaway pipeline system from Cushing, Oklahoma, to Freeport, and an expansion of its crude oil terminal in Midland, Texas, that would nearly double the storage capacity at the 2.5 million-barrel facility. For more information, see Industrial Info's reports on the Oyster Creek, Seaway and Midland projects.
Outside the Gulf Coast, Energy Transfer LP (NYSE:ET) (Dallas, Texas) subsidiary Sunoco Logistics is exploring its options to develop a crude oil terminal in Midland, which would hold 600,000 barrels of crude oil to support a proposed, 600,000-barrel-per-day (BBL/d) pipeline from Midland to Nederland, which is on the Gulf Coast. The pipeline project, which will not begin construction until mid-2022 at the earliest, would carry crude oil extracted from the Permian Basin, to be stored in one or two tanks at the terminal. For more information, see Industrial Info's project reports on the terminal and pipeline.
The Midland terminal and pipeline are part of Energy Transfer's buildout in the Permian Basin, where the company believes it has an advantage over its rivals. "There's a lot of crude companies out there battling for the crude that is available out in the Permian Basin--we're probably 1 million, 1.5 million barrels less out there than where we thought we'd be a year and a half ago," said Mackie McCrea, the co-chief executive officer of Energy Transfer, in a recent quarterly earnings-related conference call. "And there's more capacity built, of course, significantly more than it was a year and a half ago. So we're all scrambling for less barrels, but there's no company that can take the barrel, [in] so many different places, like we can."
Magellan Midstream Partners LP (NYSE:MMP) (Tulsa, Oklahoma) accounts for more active petroleum-related terminal projects in Texas than any other plant owner, although most are low-investment maintenance projects for tank inspections and maintenance. One of Magellan's largest capital-spending projects is a proposed Phase IV expansion of its petroleum products and ethanol terminal in Pasadena, Texas, along the Houston Ship Channel. The company is considering another eight tanks at the facility, which currently has a capacity of about 1 million barrels. For more information, see Industrial Info's project report.
Among the maintenance-related projects Magellan is planning to begin this spring are tank inspections and upgrades at its:
- refined products terminal in Galena Park; see project report
- refined products terminal in Houston; see project report
- gasoline, diesel and ethanol terminal in Aledo; see project report
- crude products terminal in El Paso; see project report
- refined products terminal in Odessa; see project report