By Neal Patel
Managing Director and Energy Infrastructure Practice Leader
The Port of Corpus Christi has been undergoing a historic buildout of oil and gas infrastructure that should position the Gulf Coast port as a major energy exporter for decades to come.
Last year, Houston-based Cheniere Energy, the second largest global producer of liquefied natural gas, began exporting LNG from its Corpus Christi terminal, which is progressing with the buildout of its third train for liquefaction.
There are approximately 80 energy and petrochemical industry plants, terminals and other projects in the works, or planned, up and down the Texas Gulf Coast, from Port Arthur to Brownsville, according to a Center for Public Integrity/Texas Tribune review of corporate plans, with much of that headed to Corpus Christi.
In December 2015, the Port of Corpus Christi became the first U.S. port to export a crude oil cargo after the federal government lifted a 40-year ban on U.S. crude oil exports. The port is the fourth largest in the U.S. for total tonnage and has also become a major gateway for liquid hydrocarbons, which include crude oil, refined petroleum products, and LNG.
Strategically located in close proximity to the Panama Canal, the port’s prominence has grown as it serves as one of the main termination points of oil and gas pipelines from the prolific Permian Basin and Eagle Ford. We observe that the port not only supplies local and domestic markets, but oil & gas exports that have rapidly grown to reach South America, Europe, and now, consistently as far as Asia.
Several major energy and petrochemical infrastructure projects and manufacturing facilities are open or under way, in or near Corpus Christi:
- Gulf Coast Growth Ventures began construction in the summer of 2019 on the world’s largest plastics plant. The $10 billion project is a partnership between ExxonMobil and Saudi Arabia Basic Industries Corp. (SABIC) that is expected to employ 600 workers upon its 2022 completion.
- Cheniere Energy opened a liquefied natural gas (LNG) export terminal. Two of three trains are operational, with the third scheduled to come online in the first half of 2021. Cheniere also plans to develop up to seven midscale liquefaction trains adjacent to the project.
- Steel Dynamics is on schedule to break ground this year on a $1.7 billion steel plant north of Sinton in San Patricio County, roughly 25 miles from the Port of Corpus Christi. It’s expected to be operational by mid-2021 and employ 600 people.
- MODA Midstream, which provides independent terminal, storage and distribution solutions to refiners and others, completed a 10 million barrel expansion of storage tanks in November 2019 that are located in Ingleside, Texas, with access to the Port of Corpus Christi.
- Permico Midstream Partners plans to invest $550 million to build three 100,000 barrel/day fractionators at the end of a pipeline originating in the Delaware Basin of West Texas and Eastern New Mexico. Permico’s deal is one of several fractionator projects recently completed or underway in the area.
- EPIC Midstream opened an export terminal in Corpus Christi in late 2019 and has plans to open another dock later this year. The company also opened a pipeline in August that runs from the Permian Basin to Corpus Christi and expects to open a second pipeline early this year.
- Plains All American began operating a pipeline in August 2019, called Cactus II, that carries crude from the southern Midland Basin to delivery points near Corpus Christi.
- Whistler Pipeline – The 42-inch diameter pipe is delivering natural gas from the Waha area in West Texas to Agua Dulce near Corpus Christi. The project is sponsored by a consortium which includes a partnership among MPLX (a Marathon Petroleum-sponsored company), WhiteWater Midstream, Stonepeak Infrastructure Partners, and West Texas Gas.
- Kinder Morgan placed its Gulf Coast Express Pipeline into service in September 2019.
- Phillips 66 Bluewater Texas Terminal has applied for a U.S. Gulf Coast deepwater export terminal permit, but the Maritime Administration and the U.S. Coast Guard halted review of the application in 2019. The project is currently awaiting formal announcement and a final investment decision.
Harbor Island deal hits snag
It hasn’t been entirely smooth sailing for the region, as energy interests bump up against environmental concerns in a region known for its migratory bird population, tourism and commercial fishing.
The Port of Corpus Christi Authority approved a 50-year lease for a $1 billion crude oil export terminal on Harbor Island that is expected to serve some of the largest tankers in the world, for example, but the project has become contentious. There are currently multiple objections among various constituents.
In 2018 the Carlyle Group and the Port of Corpus Christi struck a deal to build it, but in October 2019 Carlyle exited the partnership. Construction company Berry Group, which was in a partnership with Carlyle, is still moving forward and the port still supports it, so we remain confident that the project will once again gain traction.
Outlook still positive
Despite some hiccups, the outlook for energy-related infrastructure growth in the Port of Corpus Christi looks promising for the long-term due to rapidly rising oil & gas production, even against the backdrop of a challenged exploration & production environment.
There are enormous needs for capital to develop infrastructure to handle production from the most prolific supply basins in the world. People tend to observe the headlines from larger energy infrastructure projects and developments. However, Capital Alliance has a steady grasp of the industry participants and their needs throughout this impending decades-long infrastructure build-up.
Capital Alliance Corporation is a Dallas-based investment banking firm with a four-decade history and deep operational and M&A experience across many sectors, including upstream energy and energy infrastructure, among others. Capital Alliance is affiliated with Oaklins International, the world’s most experienced mid-market M&A advisor, with 800 professionals globally and dedicated industry teams in 40 countries worldwide. We have closed over 1,500 transactions in the past five years.