Port Corpus Christi could emerge as the United States’ top crude oil export hub over the next decade, thanks to more than $380 million in new shipping facilities and three oil pipeline projects worth $5.2 billion, according to a new study.
Wood Mackenzie’s North America Crude Markets Service reported that the startup of three new pipeline projects at the beginning of the year will bring more than 2 million barrels of crude oil per day from the Permian Basin of West Texas to export terminals around Port Corpus Christi once completed.
“With the significant increase in demand for exports through Corpus Christi expected in coming years- the Corpus Christi region will account for 56 percent of total U.S. crude shipments abroad,” said John Coleman, a senior analyst at Scotland-based Wood Mackenzie.
Located on the western Gulf of Mexico, Port Corpus Christi is the fourth largest port in the U.S. in total tonnage. The city of Corpus Christi is located 220 miles from Houston and 150 miles from the Mexican border.
The three new Permian Basin pipelines slated for Port Corpus Christi include the $2.2 billion- 900,000 barrel-per-day Phillips 66’s Gray Oak; the $1.1 billion- 585,000 barrel-per-day Cactus II; and the $2 billion- 590,000 barrel-per-day EPIC Crude Oil Pipeline.
“Part of this story will be a significant amount of capacity being built out of the Permian basin, pointed at the Corpus Christi market,” Coleman said. “We expect this to quadruple Corpus Christi export volumes within five years.”
Oil production in the U.S. is on pace for a record-breaking 13.4 million barrels per day by the end of 2019, according to a recent report by energy research firm Rystad Energy. Texas dominates in domestic oil production, expected to soon produce 5 million barrels per day in oil— more than even any OPEC nation except Saudi Arabia.
To accommodate the increased volume of oil exports, Port Corpus Christi is also building the multibillion-dollar Harbor Island crude oil export terminal, a deep water terminal capable of loading supertankers known as Very Large Crude Carriers.
The Harbor Island project is a partnership between Port Corpus Christi and private equity firm, the Carlyle Group. Port Corpus Christi also recently started a $380 million project to deepen the Corpus Christi Ship Channel from 47 to 56 feet, and widen it from 400 to 530 feet.
Port Corpus Christi shipped out $4.5 billion worth of crude oil for the month of May, which put it behind the Port of Houston, which accounted for $8.24 billion in crude oil exports during the same period, according to data from analytics firm WorldCity.
The Port of Houston is home to the Houston Ship Channel, a 52-mile federal waterway that includes nine oil refineries that process around 2.3 million barrels per day of oil.
The price of crude oil was $57 at the time of this report. In the past several months, oil prices have fluctuated wildly due to the China-U.S. trade war, as well as tariff threats against Mexico.