Max Midstream to develop US crude export hub

Max Midstream is planning to invest $1bn to develop a new crude export hub in Texas, including pipeline connections, up to 15mn bl of storage, and a dredging project to allow larger ships.

Crude exports at the Port of Calhoun — on the Texas coast between Corpus Christi and Houston — could start as soon as November with up to 140,000 b/d. A second phase of the project is expected to be completed in 2023.

Max Midstream purchased the Seahawk pipeline and terminal from Oaktree Capital in December for about $96mn and is adding connections to long-haul crude pipelines from the Permian and Eagle Ford basins. Once the project is complete, the connections will allow about 650,000 b/d of crude to move to the Port of Calhoun.

The company is also investing $360mn in a joint project with the Calhoun Port Authority to deepen and widen the port by 2023. Max Midstream will initially load Panamax ships and reverse lighter to larger ships including Very Large Crude Carriers (VLCCs). Once the widening and deepening project is complete, Aframax and Suezmax ships will also be able to load at the port.

Max Midstream has agreements for pipeline connections with Kinder Morgan's Crude and Condensate pipeline (KMCC), Phillips 66's Gray Oak pipeline, and the Victoria Express pipeline.

Phillips 66 in August held an open season for the 900,000 b/d Gray Oak line that included a new destination point in Victoria County, Texas. Phillips said it was connecting to a third-party midstream system near Victoria with access to export docks.

Max Midstream will have 1.5mn bl of storage at Edna, Texas, and 600,000 bl at the Port of Calhoun by November. The company is planning to increase storage to 9mn bl at Edna and 6mn bl at the Port of Calhoun by 2023. Marine infrastructure will include nine 16-inch loading arms and three eight-inch barge loading arms.

The new export hub comes as Corpus Christi and Houston dominate the US crude export market.

Corpus Christi accounted for about 45pc of US crude exports in the first half of this year and Houston accounted for about 21pc.

Overall US crude exports rebounded to 3.24mn b/d in July, according to the most recent monthly trade data. The increase followed four straight months of declines as efforts to combat the Covid-19 pandemic slashed global demand.

By Eunice Bridges