Crude oil port partners leave joint venture
A partnership to build a large offshore crude oil receiving terminal in the US Gulf of Mexico has dissolved.
Warren R. True
OGJ Chief Technology Editor-LNG/Gas Processing
HOUSTON, Apr. 22 -- A partnership to build a large offshore crude oil receiving terminal in the US Gulf of Mexico has dissolved.
Houston-based Enterprise Products Partners LP and TEPPCO O/S Port System LLC, an affiliate of TEPPCO Partners LP, have jointly withdrawn from the Texas Offshore Port System partnership in a disagreement with the third partner, an affiliate of Oiltanking Holdings America Inc.
Enterprise announced its decision Apr. 21; TEPPCO on Apr. 16.
Enterprise and TEPPCO each relinquishes its one-third interest, forfeits its initial investment, and has taken a one-time non-cash charge of $34 million against second-quarter 2009 earnings.
In August 2008, affiliates of Enterprise, TEPPCO, and Oiltanking Holding Americas Inc. (OHA) formed a joint venture to design, construct, own, and operate a new Texas offshore crude oil port and pipeline system for delivering waterborne crude to refining centers along the upper Texas Gulf Coast.
TOPS was to include an offshore port, two onshore storage facilities with about 5.1 million bbl of crude storage capacity, and an associated 160-mile, 1.8 million b/d pipeline. Total cost of the project was estimated at $1.8 billion.
According to nearly identical press releases from both companies, Oiltanking has responded by alleging that the dissociation is wrongful breach of the TOPS partnership agreement. Both companies say their actions "are permitted by, and in accordance with, the terms of the TOPS partnership agreement," and they will, "should the need arise,…vigorously defend" their actions.
Carlin Conner, OHA president and chief executive officer, said in an Apr. 23 statement that the remaining partners, Oiltanking Freeport LP and OTF GP LLC, will "collaborate with existing customers as well as other potential industrial and financial partners" to determine the next step for the TOPS project.
The "environmental, security, and economic benefits" of the project have not changed, Conner said, adding, "By reducing the dependence on lightering, the Gulf Coast refining complex will reduce the supply chain cost of long-haul crudes and provide other benefits to the region."
Development of the offshore port system and onshore infrastructure is supported, according the statement, by long-term contracts with Motiva Enterprises LLC and ExxonMobil Corp.
Contact Warren R. True at firstname.lastname@example.org.