While domestic demand remains mostly flat and restrictions on U.S. coastal shipping, U.S. refiners and natural gas liquids producers are focusing on export outlets. The U.S. allows free exports of oil products, but the current ban on crude exports remains a talking point. To capitalize on this ongoing and growing need for international sales, many logistics companies have jumped on the bandwagon to build new marine docks and export-focused terminals.

Kinder Morgan is building a products export terminal in Houston, and Enterprise is constructing an ethane export facility on the Houston Ship Channel. Sunoco Logistics is to begin exporting propane and butane from its Nederland terminal next year.

The concentration of these marine export outlets are on the Gulf Coast, mainly due to the significantly higher refining capacity than other regions in the U.S. The PADD3 refining capacity is pegged at 9.154 million b/d. The PADD3 refiners are a regular supplier of products to the net-short PADD1 region, but that south-north flow is limited by pipeline capacity and the Jones Act restriction on U.S. coastal shipping voyages.

“Crude production in West Texas and North Dakota is growing, and the demand is not (growing). There is a lack of arbitrage opportunities because of the Brent price premium over WTI,” a logistics player said.

“The U.S. is focusing on exports of distillates, other oil products, ethane, propane and butane,” he said.

Another player said that there are currently enough marine docks on the Gulf Coast, but additional docks will help reduce the growing waiting time for ships and long lines amid the rising products export trend. It will also help speed up cargo loading and vessel turnarounds, reducing demurrage and improving shipping and arbitrage economics.

Export Is Key

This summer, Kinder Morgan will start construction on its 1.2-million-bbl Houston oil products export terminal project near Lydondell refinery. The $169.5-million terminal is scheduled to be operational in the first quarter of 2016.

Kinder Morgan is also building another three to four greenfield marine docks on the eastern side of the Houston Ship Channel for export purposes. Each dock costs $25 to $30 million to build.

Enterprise Products Partners LP will build an ethane export facility on the Houston Ship Channel. Enterprise has signed a 30-year agreement with the Port of Houston Authority for use of facilities adjacent to Enterprise’s existing Morgan’s Point terminal.

The ethane export facility is expected to begin operations in the third quarter of 2016.

In May, Enterprise loaded the first cargo of refined products for export from its reactivated marine terminal in Beaumont, Texas. Located on the Neches River, the terminal can load at rates up to 15,000 barrels per hour.

Sunoco Logistics is focused on shipping crude at its Nederland terminal for both domestic and international deliveries. U.S. crude exports are mainly for Canada, but in the past year, the U.S. government has granted export licenses for Canadian crude to the rest of the world.

So far, the Canadian crude export flow out of the Gulf Coast remains sluggish despite the license approval. This could depend on international prices and demand. Also, exporters have one year to use the licenses, which are based on value of the total exports.

Apart from crude, Sunoco Logistics is also working on propane and butane exports out of Nederland terminal for next year. The terminal will receive natural gas liquids supply from Mont Belvieu.

In February, NuStar Energy L.P. completed construction of a private marine loading dock at its North Beach Terminal in Corpus Christi, Texas, and had its first ship at the dock to be loaded with crude oil. Originally scheduled to be completed in the second quarter of this year, NuStar expedited the project in order to meet strong customer interest in using the dock to transport shipments of Eagle Ford crude oil by water.

With this new dock, NuStar now has three loading docks in the Port of Corpus Christi, and can load crude oil onto ships simultaneously on all three docks. NuStar also completed major additions and upgrades to the terminal’s pump systems. With all of these upgrades, the North Beach terminal’s marine loading capacity was more than tripled to 400,000 b/d.

Oiltanking and Houston Fuel Oil Terminal Company have spare marine docks and terminal space which could be used for exports. The U.S. is facing a declining crude import volume, and the fuel oil trading has been lackluster and challenging on a weak demand. Oiltanking is focused on crude storage and HFOTC is on fuel oil and crude.

Trafigura Terminals LLC is an 84-acre industrial site in Corpus Christi, Texas, consisting of approximately 600,000 barrels of storage for crude oil, fuel and condensate. It began construction of a second oil dock in early 2013. Besides crude and fuel, Trafigura terminal is also involved in LPG exports.

In the Northeast, the refiners and logistics players are also seeing a push for oil products, especially distillates, but that outflow is significantly less than the Gulf Coast due to the comparatively smaller refining capacity and the growing local market demand for ultra-low-sulfur diesel.

In the near future, logistics companies are also eyeing possible condensate exports, depending on a lifting of the current export ban. Some players remain optimistic on the lifting of condensate export ban, but there has been no definitive word on that so far.

Also, it is noted that the U.S. is seeing the liquefied natural gas export trend moving forward as more permits are granted for expensive LNG terminal construction.