TEXAS DEEPWATER OIL PORTS VIE FOR SUPPORT

A.D. Koen
Gulf Coast News Editor

Two proposals for deepwater oil ports in the Gulf of Mexico apparently are competing for support from several of the same companies.

Port of Corpus Christi Authority (PCCA) officials believe some companies to which they have broached preliminary ideas for an inshore deepwater oil port also are members of a group studying plans for a deepwater port off Freeport, Tex.

Safeharbor, proposed on Harbor Island across from Mustang Island in the Corpus Christi Ship Channel (CCSC), and Texas Offshore Oil Port (Texport) won't vie for exactly the same oil imports.

Companies importing oil to refineries on Corpus Christi Bay would account for about half the 1 million b/d PCCA officials believe will be needed for Safeharbor to be economically viable. The rest would come from companies moving imported oil into the Houston area through Galveston Bay.

Phillips Petroleum Co., which is leading about a dozen companies evaluating Texport, hasn't released many details on that project. But in addition to delivering oil imports to refining and petrochemical plants around Houston, Texport could send crude via Phillips' Seaway pipeline as far inland as Cushing, Okla. (OGJ, Dec. 24, 1990, p. 14).

Although not dependent on the same oil imports, Safeharbor and Texport are aiming at the same goal: to reduce oil volumes lightered in the Gulf of Mexico from ULCCs and VLCCs to tankers small enough to navigate ship channels of ports on the Texas coast.

With interest from 10-12 unidentified companies, Texport appears to have a broader base of funding. Also, the Texport group has been in Phase 2 of its study since last fall, having satisfied technical, regulatory, and economic considerations (OGJ, Sept. 17, 1990, p. 38).

Phillips officials said an announcement will be ready in a matter of weeks.

PCCA officials just last month concluded preliminary studies and began measuring interest among possible Safeharbor supporters. That process that could last until midyear.

For the second phase of its Safeharbor study, PCCA is seeking eight to 12 companies willing to put up $20,000-40,000 apiece.

CONSTRUCTION COSTS

Beyond decreasing crude oil lightering in the Gulf of Mexico, Safeharbor and Texport don't easily compares

With a projected construction cost of $1.1-1.2 billion, Texport could move as much as 2 million b/d of oil via pipeline from a monobuoy in 110 ft of water, 27 miles off Freeport, to an onshore tank farm.

Phillips said the Concept for Texport stems from earlier plans for a 2.6 million b/d offshore deepwater port. Originally proposed in 1972, Seadock Inc.'s deepwater oil terminal would have been sited in 90-110 ft of water, 26 miles off Freeport.

Seadock facilities were to include three monobuoys and a platform connected by two 52 in. pipelines to onshore storage on a 1,600 acre site near Brazosport, Tex.

Supported by 13 companies at its height, Seadock's reported construction costs varied from $650 million to $700 million. The project was shelved in 1977 following withdrawal of companies with a combined 52% interest.

PCCA officials believe the Safeharbor deepwater port could be built for $455 million. Initially, construction would include:

Dredging a 10 mile channel 74 ft deep by 500-700 ft wide.
Constructing three docks in a 74 ft deep berthing area enclosed on three sides by land. Oil booms bridging the fourth side would be opened only to allow tankers to enter and leave.
Building nearby an 11.5 million bbl tank farm.
Laying a 36 in. pipeline from each dock in the berthing area to move oil to the tank farm.

Safeharbor's estimated initial throughput is 1.3 million b/d.

PCCA officials said throughput could be increased to 2 million b/d by installing a fourth docking area in Safeharbor's berthing area, laying a fourth pipeline to the tank farm, and slightly increasing storage.

Proponents said fully loaded tankers as large as 300,000 dwt could reach Safeharbor.

Pipeline capacity connecting Safeharbor's storage tanks to refineries near Corpus Christi would have to equal offloading capacity in the berthing area. Those costs aren't included in Safeharbor's construction estimates.

But PCCA officials said several pipelines are in place that could be adapted to carry crude oil and petroleum products to refineries around Corpus Christi and Houston.

OPERATING ECONOMICS

For Safeharbor to operate economically, PCCA officials have to triple the 335,000 b/d of oil already moving across bay waters.

PCCA officials estimate local refiners could increase oil imports into Corpus Christi to nearly 500,000 b/d, if Safeharbor made it more economical.

Companies with plants around Corpus Christi Bay and refining capacities include Champlin Petroleum Co. 140,000 b/sd, Coastal Refining & Marketing Inc. 95,000 b/sd, Koch Refining Co. 125,000 b/sd, and Southwestern Refining 104,000 b/sd.

Also, Diamond Shamrock Corp. has a 115,000 b/sd refinery at Three Rivers, Tex., that receives feedstock through the Port of Corpus Christi.

Valero Refining Co. operates a plant off Corpus Christi Bay that refines a feedstock of high sulfur, residual oil. But if Safeharbor is built, PCCA officials believe, Valero isn't likely to use it.

To reach throughput of 1 million b/d, PCCA officials must convince refiners in other areas to import oil through Safeharbor.

For a time last summer, Exxon Co. U.S.A. did exactly that, PCCA officials said.

When a collision in Galveston Bay between the Greek tanker Shinosa and a barge closed the Houston Ship Channel for several days, Exxon imported oil through Corpus Christi and moved it through a 16 in. pipeline to its 448,000 b/sd Baytown, Tex., refinery.

PCCA said Exxon also has an inactive 30 in. gas line running from the King Ranch area near Corpus Christi to the Houston area that could be adapted to handle oil from Safeharbor.

Jim Shiner of Shiner Mosley & Associates, a Corpus Christi firm that helped develop the Safeharbor concept, said Safeharbor's lower construction cost should catch the attention of Texport participants.

"We want to make sure they understand there is an alternate," he said. "We're talking about saving $500 million."

Also, according to estimates developed for Shiner Mosley and PCCA by Temple, Barker & Sloane Inc. (TBS), Safeharbor's operating costs will be lower than other means of importing oil into Texas.

Based on estimates that included ship charges, port fees, and maintenance expenses, TBS determined that importing a barrel of oil through Safeharbor will cost about 21 .

By comparison, TBS found that it costs 27/bbl to import crude by lightering and 57/bbl by transhipment.

To estimate Texport's operating costs, Shiner said, TBS obtained Seadock data from the Texas Deepwater Port Authority and updated those figures with 1991 costs. Based on that calculation, it would cost 33/bbl to import oil through Texport, he said. A similar exercise with information from Louisiana Offshore Oil Port produced an operating cost of 33/bbl, Shiner said.

LOGISTICAL BENEFITS

PCCA said Safeharbor would reduce safety and environmental hazards in Corpus Christi Bay by decreasing tanker traffic and improving control of oil discharged accidentally during offloading. At present, to deliver oil to refineries at the west end of the bay, an average of 1.5 tankers/day follows CCSC across the bay-a distance of 16 miles-traversing the Intracoastal Waterway en route.

Tankers using Safeharbor would dock just inside the entrance at the east end of the bay and discharge cargo without crossing the Intracoastal Waterway.

That would eliminate 47.3 tanker-barge collision opportunities a day, Shiner said.

He said Safeharbor would improve protection of area beaches and wetlands because oil accidentally discharged in the enclosed berthing area would be controlled immediately.

Shiner said port officials would have more booms on site ready for crews to deploy immediately whenever a spill might occur. Oil skimming equipment also could be built into the side of Safeharbor's berthing basin, he said.

Shiner said oil spills resulting from grounding incidents would be minimized by the bay's muddy bottom.

Part of the material removed from the dredge disposal site to create Safeharbor's berthing basin would be used to raise the tank farm site. The rest would be disposed of on sand flats on San Jose Island or used to help maintain area beaches.

Shiner said the U.S. Fish & Wildlife Service classifies San Jose Island's sand flats as wetlands of marginal importance to the area's ecology.