Argus Live: Enterprise bullish on demand, offshore port

Global demand for crude should rebound strongly in the second half of 2021 as vaccinations expand and countries lift Covid-19-related lockdowns, Enterprise Products co-chief executive Jim Teague said.

"We're going to look totally different in the second half of the year and we're going to see demand pop back strongly and that's going to be bullish for hydrocarbons," he said today at the Argus Crude Live virtual conference.

Teague also said that US crude exports will grow and that the company is moving forward with its planned offshore crude export terminal.

The US Maritime Administration is reviewing Enterprise's application for the Sea Port Oil Terminal (SPOT) off the coast of Freeport, Texas, which will be able to fully load very large crude carriers (VLCCs).

Enterprise is expecting approval of the project "by the third quarter or so," he said.

Enterprise made a final decision on SPOT last year after signing term contracts for crude transport, storage and marine services with Chevron, a key oil producer in the Permian basin. SPOT includes two crude pipelines running from the port to the shore. Two single-point mooring buoys will be able to load and export oil at about 85,000 bl/hour.

The number of US offshore VLCC export projects has narrowed in the wake of Covid-19 and its economic consequences. Only four major projects are still in the works, including SPOT. Sentinel Midstream and Energy Transfer each have an offshore VLCC project. A fourth is a joint plan by Phillips 66 and Trafigura.

Teague said that SPOT has a strong advantage because of its broad access to supply basins.

"We've got crude coming from the Eagle Ford. We've got three pipelines bringing it from the Permian" as well as the joint venture 950,000 b/d Seaway pipeline system from Cushing, Oklahoma, he said. SPOT would also have connectivity to every refinery in the Houston, Texas City, Beaumont and Port Arthur areas.

Teague said that some of the producers shipping crude to Corpus Christi will likely shift those volumes to Houston when contracts expire because Houston offers more storage options and more market opportunities.

The pipelines to Corpus Christi and docks in Corpus Christi were underwritten by producers "so effectively they have sunk costs," he said. "Those contracts end at a certain point in time."

Corpus Christi last year became the top port for exports of US crude after three major pipelines went into service moving Permian and Eagle Ford crude to that port.

The Port of Corpus Christi said last week that its US crude exports hit a record high of 1.9mn b/d in December. The port's chief executive Sean Strawbridge is speaking at the Argus Crude Live virtual conference tomorrow.

By Eunice Bridges