DALLAS – The Port of Corpus Christi, Texas, the largest energy export seaport in the U.S., will partner with the Carlyle Group to finance the first onshore site in the U.S. Gulf capable of servicing fully-laden Very Large Crude Carriers.
The $1.2 billion deal includes financing for dredging the port ship channel to a depth of 75 feet and helps the port compete with offshore oil export facilities in operation or planned in the Gulf of Mexico.
In July, the port issued $200 million of revenue bonds for its Channel Improvement Project, which is awaiting funds from the U.S. Army Corps of Engineers. To service the large tanker vessels, the port needs to deepen its channel from the current 45 feet.
Construction of the new terminal on Harbor Island in Corpus Christi Bay would require no capital outlay from local taxpayers, officials said. A port spokesman, asked if any private activity bonds might be used, deferred questions to the Carlyle Group, which had not responded as of mid-day Tuesday.
Under the agreement, the port will receive regular rental payments, volume-based tariff income, land grants and other proceeds that will help the port fund other aspects of its operations.
The terminal is expected to be operational in late 2020. Carlyle’s equity for this investment will come from its Global Infrastructure Fund.
The terminal would include the development of at least two loading docks on Harbor Island as well as crude oil tank storage inland across Redfish Bay on land secured by Carlyle.
The project is subject to agreement on definitive documentation between the parties, satisfactory completion of due diligence and final approval from Carlyle’s investment committee, officials said.
“A project of this magnitude further underscores the vital role the Port of Corpus Christi plays in the global energy markets and as an important economic generator for the great state of Texas,” said Sean Strawbridge, its chief executive officer.
“Corpus Christi is certainly where the incremental barrels want to go as we have deep water, availability of land for development and plenty of capacity to absorb the forecasted U.S. energy production growth in oil and gas. Corpus Christi is open for business,” said Charlie Zahn, chairman of the Port of Corpus Christi Commission.
Ferris Hussein, managing director on Carlyle’s Global Infrastructure team, described the project as having “critical importance to the United States, and we will collaborate with all stakeholders to ensure such service is provided.”
In August, Trafigura U.S. Inc., a privately held physical trading and logistics company with offices in Houston, announced plans to build a new offshore deepwater port facility in the Gulf of Mexico to be called the Texas Gulf Terminals Project.
The Trafigura facility would allow Very Large Crude Carriers — capable of carrying 2 million barrels of crude oil — to be fully loaded through a single-point mooring buoy system. It would be moored about 15 miles offshore from Corpus Christi.
“The Texas Gulf Terminals Project will give U.S. crude oil producers, particularly Texas operators, safer, cleaner and more efficient access to very large crude carriers, ensuring that the economic and employment benefits of increasing domestic crude production can be fully realized right here at home,” said Corey Prologo, director of Texas Gulf Terminals Inc. and director of Trafigura, North America.
A permit application for the project was submitted to the Marine Division of the U.S. Department of Transportation on July 9.
Corpus Christi is developing liquefied natural gas exporting through terminals financed by private investors. As the port closest to the Eagle Ford Shale and Permian Basin oil and gas producing regions, Corpus Christi expects to improve its competitive posture against facilities in Houston, New Orleans and the Sabine Pass between Texas and Louisiana.
Exxon Mobil Corp. and a Saudi partner announced plans last year to build a nearly $10 billion petrochemical plant just north of Corpus Christi as part of a venture receiving nearly $2 billion in tax breaks from state and local governments.
As the largest energy exporting hub, Corpus Christi ranks fifth in the U.S. in total cargo tonnage.
Harbor Island in the northeast perimeter of Corpus Christi Bay is within the city limits of Aransas Pass and Port Aransas.
The property has 1.5 miles of frontage along State Highway 361 from the northwest corner of the ferry landing. SH 361 is the traffic artery that services the island.
The Port of Corpus Christi has completed the filing of a permit to develop a 50-million gallon per day desalination plant on Harbor Island. The City of Corpus Christi will construct and operate the plant.
