Crude Summit: Loop expects rising export volumes ahead

A flood of new crude supply headed to the eastern Louisiana coast will require more exports to soak up the supply, the head of the Louisiana Offshore Oil Port (Loop) said today.

"There's going to be a tsunami of crude coming into the area," as more supply from the Permian basin creates the need for more exports, Loop chief executive Terry Coleman told the Argus Crude Summit in Houston, Texas, today.

Loop, currently the only US facility capable of fully loading very large crude carriers (VLCCs) with a capacity of 2mn bl, can export about 1mn b/d using existing infrastructure, Coleman said.

Last June Loop loaded six VLCCs in a row because of favorable arbitrage and other unique circumstances, but volumes will be lower, at 1-4 VLCCs a month "until additional supply comes into the region," Coleman said.

The region's current oversupply available for export is about 200,000 b/d, Coleman said. The balance could shift more toward exports once the 1.2mn b/d Capline crude pipeline is reversed to move crude south toward the US Gulf coast.

Work to purge the Capline was completed late last year, and Marathon Petroleum and co-owners BP and Plains All American Pipeline plan to offer light crude shipping from Patoka, Illinois, to St James, Louisiana, in mid-2021. Heavy crude service will begin in 2022. Loop expects the reversed Capline to move 300,000 b/d in mid-2021, Coleman said.

Several companies — including Enterprise Products Partners, Enbridge, Phillips 66, Trafigura, Tallgrass Energy and Sentinel Midstream — are weighing offshore oil ports in the US Gulf coast as demand grows for exporting US crude.

Plains has looked at offshore VLCC ports, but "you probably only need one or two today, especially when you take into account the capability that the Loop has," Plains executive vice president Chris Chandler told the Argus event.

Offshore oil ports are expensive to build, and "if you are not careful in how much you spend to build the facility you can rapidly consume the advantage that you gain in loading a larger ship instead of a lightering operation offshore," Chandler said.

By Chris Baltimore