Three companies plan to build an oil terminal and pipeline network off the Texas Gulf Coast capable of handling nearly 20 percent of the nation’s daily imported oil.
Demand from expanding refiners along the coast, from Freeport to Port Arthur, is driving the $1.8 billion project, executives said Monday. It will be the second offshore port in the Gulf of Mexico.
The Texas Offshore Port System, or TOPS, is a joint venture of Enterprise Products Partners LP and Teppco Partners LP, both based in Houston, and Oiltanking Holding Americas Inc., a subsidiary of Germany’s privately held Marquard & Bahls AG.
The terminal will allow huge oceanic tankers to unload crude about 36 miles off the coast of Freeport, avoiding sometimes fog-shrouded coastal areas and other hazards.
Two floating buoys at the terminal will be connected to a pumping facility anchored in 115 feet of water, which will move the oil to shore via an undersea pipeline. Once ashore, another pipeline network will carry the oil to storage tanks and refineries. Altogether, the pipeline network is expected to be 160 miles.
In a conference call Monday, Enterprise’s president and chief executive, Mike Creel, said TOPS is needed to provide for ongoing refinery expansion along the Texas Gulf Coast.
Exxon Mobil Corp. and Motiva Enterprises LLC have made long-term commitments for shipments from TOPS to their coastal refineries, a big lift for the project, Mr. Creel said.
Motiva, a partnership involving Royal Dutch Shell PLC and Saudi Arabia’s national oil company, has said it plans to nearly double the size of its refinery near Port Arthur, making it the biggest in the nation and one of the largest in the world.
TOPS “will provide existing and expanding refineries on the Texas Gulf Coast with an efficient and reliable alternative for imported crude-oil delivery,” Mr. Creel said on the call.
“Our projects are very timely,” he added.
With a capacity of 1.8 million barrels of crude per day, TOPS will be able to handle about 18 percent of total U.S. crude imports.
It is built to accommodate the world’s largest oil tankers, which can’t navigate Texas’ ship channels when they are laden with oil. Currently, tankers must transfer crude to smaller ships for transport to refineries, a burdensome and costly process called lightering.
TOPS will be similar to an existing project called the Louisiana Offshore Oil Port, which handles about 12 percent of the nation’s crude imports. LOOP has been around since 1981 and is tied by pipeline to about half the nation’s refining capacity, much of it along the Mississippi River from the New Orleans area north to Baton Rouge, La.
Enterprise and Teppco are pipeline outfits, while Oiltanking specializes in petroleum storage. Each will contribute $600 million and own one-third of the project, which is expected to open in the fourth quarter of 2010.