Up until about three years ago, The Port of Corpus Christi was a significant import oil port with three major refineries and a number of chemical companies,” said John P. LaRue, executive director at The Port of Corpus Christi. According to LaRue, that has now changed with exports having exceeded imports.
“With the development of the Eagle Ford Shale, we’ve seen a significant change where the amount of imported oil has dropped off considerably, especially last year and in the beginning of 2013,” he said. “That has sort of leveled off now and what we’re seeing is the continued development of the Eagle Ford Shale oil aspect has led to a significant amount of oil that’s coming into the port and is moving from our port to other ports in the Gulf and the East Coast. We haven’t seen this kind of change since a couple of the refineries came on line in the early ’80s. For more than 30 years, this is the biggest change the port has seen.”
LaRue, who has been executive director of The Port of Corpus Christi for the past 19 years, oversees the day-to-day operations of the port, which is one of the largest in the United States and the largest economic generator of the region. LaRue’s oversight includes the departments of Engineering, Finance & Administration, Government Affairs, Security, Operations, Human Resources and Trade Development. LaRue also reports to a seven member commission.
“We expect the import number could go down a bit more but, at least for the foreseeable future, a lot of the imports are the heavier crudes needed here by the refineries,” LaRue said. “So they can’t just flip a switch and take the very light condensate type oil from Eagle Ford and refine that. Their refineries aren’t set up that way. So there will continue to be demand here at least for the foreseeable future.”
With this decrease in imports and increase in exports comes greater demand, LaRue said.
“We are experiencing a much greater demand for dock space, tanks and a lot more pipelines from the Eagle Ford area and also connecting through the Permian Basin,” he said. “On the import side, we’ve seen a lot of frac sand, which is used in the fracking process. We’re also seeing a lot of oil and gas pipe coming into the port.
“The Eagle Ford area is only about 70 miles from the port and it’s about halfway between here and San Antonio, so a lot of the sand and pipe are trucked from here to Eagle Ford. Quite a bit of the oil is also still trucked in here from Eagle Ford but, eventually, there will be less on the trucking side and more will come in by pipeline.”
Far and away, the Eagle Ford Shale has been the major influence of this change in imports/exports, according to LaRue.
“We were doing fine before but this has stimulated a lot of growth and new development not just for the port but for the entire region,” he said. “A lot of new companies are coming in to take advantage of this. We have four new docks under construction right now that are either private or on port land but leased to private operators to construct and operate.
“Because of the plentiful supply of natural gas involved in Eagle Ford, there is a lot of foreign investment coming into the port area. We have four major facilities that are either being built right now or are waiting for final environmental air quality permits. The companies are from China, Austria, Switzerland and Italy. Total value of the four projects is about $4 billion. The reason they’re here is obviously because of access to a deepwater port as well as the transportation links with the railroads, the highway system, and a plentiful and stable supply of natural gas.”
These projects mark the beginning of a great deal of future growth.
“We expect this to be quite a long run as far as oil and gas,” LaRue said. “We’re going to see another level, with both oil and gas, where those products will be taken apart by industrial processes. In the case of the gas, there are several different gases that will be pulled out of the gas from Eagle Ford and sold off individually. In the case of the oil, there will be some changes made to the oil from Eagle Ford, and it will make it a different composition that can then be exported to other countries, not just the United States. We think there is a lot more to come. We have several years to go before we hit the peak.”
Stability of the port, region
The port is much more financially stable as a result of these recent changes.
“Our revenues are up this year and were up last year as well,” LaRue said. “We’re now putting together our budget to take to our port commission and we’re expecting another good year in 2014.
“We’re seeing a lot more revenue and that means we’re going to spend more money on port infrastructure in order to develop more facilities. We’re spending a lot of money on rail. Over the next four years, we’ll spend close to $50 million on new rail infrastructure. That’s the most we’ve ever spent. A lot of new public and private docks are being built. So the impact on the port both from a financial and operating point of view is going to be significant.”
Recently, there has been a lot of tank storage construction by midstream companies and other major companies near the port.
“Large companies like Valero, NuStar, Trafigura and Flint Hills Resources have all built additional tank storage so they can handle these import/export changes so storage isn’t really causing a problem as far as the movement of additional cargo,” LaRue said. “We’re pretty much caught up on the tank side. We’re still working to make sure we have enough dock space and enough storage areas for barge fleeting. We have a lot of oil we’ll move by barges to other Gulf ports.
“We’re seeing an increase in the number of barges that are here so we’re building barge mooring and storage areas so there won’t be a lengthy delay when the cargo is ready. Those are the kinds of things that are good problems to have.”
Port involvement with local, international companies
The Port of Corpus Christi and LaRue deal directly with local and international customers that are interested in leasing the port’s space to build facilities.
“We own a lot of public oil docks, which is unusual,” LaRue said. “Usually, oil docks in most of the major energy ports are privately owned. We have a 50/50 split where there are private oil docks but we also own public ones. We’re directly involved with the users and customers that come in. We could have five or six different customers using one of our public oil docks. We’re involved with the needs they have for the dock and for storage space behind the dock.
“We work in partnership with international companies to attract them to our port. It is a very competitive situation, so we’re constantly striving to make our port more competitive. We also work closely with the state, counties, city and the Corpus Christi Regional Economic Development Corp.”
Now and into the future, there will be a need to look beyond the port because land adjacent to the Corpus Christi Ship Channel is limited, according to LaRue.
“We have started looking at areas beyond the Corpus Christi Ship Channel where we can create industrial corridors and have the cargo moved, depending on the type of industry it is, from those corridors to the port,” he said. “That’s underway right now. It’s a new venture for us. We think for the longer term future — five years or more out — that’s what we’re going to have to do because we’ll be at capacity adjacent to the port.”
Yet another good problem to have, LaRue said.
For more information, visit www.portofcorpuschristi.com or call (800) 580-7110.