March 15, 2012 [Reuters] - Oiltanking Partners LP plans more storage capacity at its crude and refined products terminal in Houston after it completes a current 1-million-barrel expansion, eying an influx from the Cushing oil hub once planned pipelines come on line.
Speaking to analysts on Thursday in its fourth-quarter conference call, the company said the planned expansion could be as much as three times bigger than the current one.
This is due to growth in crude from new oil plays such as Eagle Ford as well as Canadian crude from pipelines including the Seaway, Keystone and Long Horn.
“Eagle Ford is making its way to us via the Kinder Morgan system and the Enterprise system that’s been announced and we will have connectivity to,” said Carlin Conner, chairman, president and chief executive of the company.
“And in the future, we hope to have connectivity to any Cushing system whether they be the Seaway reversal, TransCanada or even the Long Horn system,” he added.
These are several of the pipeline projects on the books to carry crude from the glutted Cushing, Oklahoma hub to the country’s largest concentration of refineries along the U.S. Gulf Coast.
The company said it would make a formal announcement soon on the exact scope of the project and give details about the connectivity to TransCanada Corp’s Keystone pipeline.
Oiltanking said it was on track to complete the current, 1-million-barrel expansion in the second quarter of 2012. Of this expansion, 655,000 barrels came on line in 2011.
Conner said the company was witnessing a mix of users in crude oil storage.
“We are seeing more producers and more traders in the market,” he said.
In Houston, Oiltanking has 12.1 million barrels of storage capacity and six deepwater docks.
The company also has 5.7 million barrels of storage capacity in Beaumont, Texas, home to a 344,500-barrels-per-day ExxonMobil Corp refinery and a trading hub for oil products in the upper Gulf Coast region.
Oiltanking is considering an expansion in Beaumont, partially related to the expansion of an unidentified customer.
Beaumont, which has three docks, is accessible by pipeline, tapping TEPPCO’s and Centennial’s product pipeline, ExxonMobil’s refinery pipeline carrying vacuum gas oil (VGO) and Valero Corp’s refinery crude pipeline.
Oiltanking said it sees waterfront growth opportunities given higher distillate exports from the Gulf Coast to Europe and South America and increased deliveries of crude by pipeline.
