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Are offshore mega terminals the solution to giant oil tankers?

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As the US oil industry grows, so does the size of its tankers. 

The latest mega-tankers are designed to hold massive quantities of oil, but building bigger ships means ports can no longer support them.

Very large crude carriers (VLCC) require deeper berths to dock in, that most ports can't support
(Image via Reuters)

Very large crude carriers (VLCCs) can carry up to 2 million barrels of oil per voyage. The economic benefits of using these rather than several smaller ships are huge. But when filled they weigh between 180,000 and 320,000 dead weight tonnes (DWT), which means they can only operate in very deep waters. 

Most US ports are too shallow for the VLCCs to berth, so new solutions have to be found. In some circumstances tankers are forced to be filled only halfway, then topped off by another ship once at sea. 

It’s an expensive, inefficient solution that risks spilling vast amounts of oil. 

To really adapt to these larger ships, new infrastructure needs to be designed. In some cases, existing ports can be adapted to have deeper berths that can accommodate the tankers. Currently the only one that can fully load a VLCC is the Louisiana Offshore Oil Port (LOOP). However this is both an import and export facility, so its capacity for more ships ready for export is limited. 

Other ports are more limited by space, and so a more inventive solution is required.

The Louisiana Offshore Oil Port is the only port that can fully load a VLCC
(Image via LOOP)

The Texas Gulf Terminals Project is planned to be the US’s first offshore mega-terminal, with construction expected to begin within the next couple of years. 

The terminal will sit 12.7 nautical miles off the coast of Corpus Christi, Texas. There, the water depth is approximately 93ft - plenty for a VLCC to easily berth. 

Oil will be stored on shore, then pumped to the terminal through flowlines, at a rate of 60,000 barrels per hour. 

A VLCC can be docked and fully loaded at the offshore terminal in less than 48 hours. 

“Texas Gulf Terminals is building a new offshore Deepwater Port facility that will safely, efficiently and cost-effectively export US crude oil at a time when new infrastructure is critically needed,” said Corey Prologo, director of Texas Gulf Terminals and the larger commodities trading company Trafigura who are supporting the project. 

“Oil production in Texas is booming but producers are facing a major infrastructure bottleneck as they try to move oil to markets where it can be sold.”

VLCCs - very large crude carriers - can carry up to 2 million barrels of oil per voyage. They are essential for exporters as the demand from the Far East increases
(Image via Pinterest)

Response to a growing demand

Exporting is becoming a more important part of the US oil industry, with production surging and greater demand coming from the Far East. 

In 2016 exports of US oil were under 0.5 million bpd. By 2018 that became 1.6 million bpd, and the number is rising. Projections show that by 2022 the US could be exporting up to 4.8 million barrels per day. 

With such a rapid expansion, VLCCs are going to become invaluable, so investment in infrastructure now is certain to pay off further down the line. 

The Texas offshore mega-terminal will hugely benefit the ability to load up these massive tankers, and create a boost in jobs and economic benefits in the area, but it is only a single project that can’t accommodate the entire country’s output itself. 

“Once constructed, out project will handle only about 10% of the expected growth in US oil production,” says Prologo. “We need to be talking about how to get that other 90% that is projected to come online in the coming years out to market, whether that means additional offshore facilities, port upgrades, or all of the above.”

With the increase in VLCC usage demanding more infrastructure offshore and in key ports, there are significant prospects for hundreds of construction jobs
(Image via Reuters)

It’s likely that we will therefore see many new infrastructure projects at major US ports over the coming years, with more money being invested in to revolutionary ideas and hundreds of new jobs being created.  

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Frank J D'Amelio, 27 December 2018
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Are offshore mega terminals the solution to giant oil tankers? - Time to read 4 min
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