Energy Transfer weighing Texas VLCC project

Energy Transfer is negotiating with potential shippers on a project to load very large crude carriers (VLCC) connected to its terminal in Nederland, Texas.

The company did not specify whether it would be an offshore port.

Energy Transfer is "extremely optimistic" that the VLCC project will move forward, chief operating officer Marshall McCrea said while reporting second quarter earnings. More details will be announced when the project gets closer to a final investment decision (FID), the company said.

Energy Transfer offers a significant advantage for a VLCC project from a supply perspective as Nederland receives crude from many regions — including the Bakken shale, the Permian basin and the hub at Cushing, Oklahoma, Energy Transfer said.

The VLCC project would take 2.5-3 years, including the regulatory process and construction.

Energy Transfer is gearing up to move more crude to Nederland later this year as an expansion of its Permian Express system is almost complete. The expansion — dubbed Permian Express 4 — will add 120,000 b/d from Colorado City to Nederland. The full capacity will be online by the end of the third quarter.

The company has been gradually expanding the Permian Express system from the Midland basin to Nederland amid strong demand to move west Texas oil to the US Gulf coast for export.

The first two phases of the Permian Express system, lines 1 and 2, carry 150,000 b/d and 200,000 b/d, respectively. A 140,000 b/d Permian Express 3 expansion went into full service last year.

Several companies — including Enterprise Products Partners, Enbridge, Oiltanking, Phillips 66, Trafigura, Tallgrass Energy and Sentinel Midstream — are also weighing offshore oil ports in the US Gulf coast.

Just one US port, the Louisiana Offshore Oil Port (LOOP), is currently capable of fully loading VLCCs.