Timing is everything. The Port of Corpus Christi, its development long pinned on oil and container imports connected to the Panama Canal expansion, suddenly finds itself looking in the opposite direction as investors tap into massive oil reserves in South Texas.
And, just in time for the port to take advantage of one of the largest U.S. oil developments in years, the Army Corps of Engineers received funding last year to start dredging a new channel extension to 45 feet to serve a long-awaited major terminal project.
The result is a boom in plant investments designed for export in and around the port. When completed, those projects will tilt the balance of the port’s business toward exports, largely of liquid and dry bulk cargo, and away from the oil and containerized imports that had been anticipated when the Panama Canal opens its big new locks in 2015.
“We were not as focused on either of these four years ago. But the market changes and times change,” said John LaRue, executive director of the Port of Corpus Christi Authority. “Now we are right at the tipping point where it’s switching. We have more projects (going) at any one time now than we’ve had in the last seven years combined.”
The port is still talking to Asian container lines about using the expanded La Quinta terminal for imports. “Most of the container lines in Asia I’ve talked to about their plans for the expanded canal are looking at not running the large container ships of 10,000 to 12,000 TEUs into the Gulf ports, but are looking at transshipment,” LaRue said. “They are saying that most of the East Coast ports will be served through transshipment, as well.
The port still plans to build out the existing La Quinta terminal as a multipurpose container and bulk terminal on the channel being deepened. Plans call for a three-berth, 150-acre terminal with nine ship-to-shore cranes. The terminal site already has rail access and cotton warehouses nearby, and the port is in discussions with three terminal-operating companies about building out the rest, LaRue said.
Increasingly, however, the port’s plans have turned to negotiating big industrial projects that produce energy-based and other products for export. It has delayed plans to expand the existing terminal until those projects have been nailed down. “The new terminal itself was a chicken-and-egg thing,” LaRue said. “We couldn’t do much until the customers we were talking to saw whether we would have 45 feet of water there or eight feet like it is today.”
Now those customers are finalizing plans for new plants near the port. “Starting in 2014 through 2017, we will have several of these plants coming on line,” LaRue said. “It will change the face of the port from an oil importing port to one that produces a lot for export.”
Houston-based Cheniere Energy plans to build a $10 billion gas liquefaction plant by 2017 to produce LNG for export, mainly to Japan and India. It filed an application in late August with the Federal Energy Regulatory Commission to build the plant just weeks after it began work on a similar venture at its Sabine Pass plant in Louisiana.
The plant would export up to 15 million metric tons a year of LNG, or about 2 billion cubic feet a day, by the end of 2017 and would comprise three production units, called trains.
Cheniere commissioned Bechtel to design and build the plant on 612 acres on the northern coast of the Corpus Christi Bay, along the La Quinta Ship Channel, which would be able to accommodate the larger post-Panamax tankers that will transit the Panama Canal once its big new locks are completed.
The canal currently can handle about 20 percent of the world’s LNG tankers. When the new locks open, the canal will be able to handle 75 percent of them.
An unidentified European company is considering another big new project designed to take advantage of Corpus Christi’s deepened La Quinta channel. Negotiations are under way for the company to invest $1 billion-plus in a plant to process imported iron ore into a finished product called hot briquette iron for export to automobile plants in Europe and for shipment to domestic U.S. auto plants. The port hopes to conclude an agreement by the end of the year.
Another project involves the plan by Italian resin manufacturer M&G Group to build a $1 billion PET plant on the channel by 2016 to manufacture polyethylene terephthalate for shipment to U.S. and overseas plants that use it to make plastic bottles. M&G will purchase the land and finalize plans in the next 60 days.
LaRue said M&G chose Corpus Christi because of rail access, which it plans to use to bring 40 carloads in and out of the plant every day. The new PET plant will be built next to a new railyard the port is building with the help of an $18 million federal TIGER grant.
All of these new investments come on top of the oil and gas pipe-manufacturing plant China’s Tianjin Pipe started building last year, the largest Chinese industrial investment in the United States. Being constructed on 250 acres in a small town, Gregory, near the port, the plant will have its own mini-mill designed to produce 700,000 tons of pipe a year when it’s completed in 2014.
“Talk about being in the right place at the right time,” LaRue said. “They are going to be in the right place to sell a lot of their products without having to transport them very far.”
Because of the massive development of oil production in the Eagle Ford Shale fields in South Texas, existing oil and gas pipelines to the port are being thrown into reverse. Pipelines that had been built to transport imported crude oil from the port to refineries in San Antonio have been reversed, and those refineries are processing Eagle Ford U.S. crude.
Eagle Ford crude oil also is flowing through other pipelines to Corpus Christi for shipment to refineries in the Gulf and on the East Coast on Jones Act tankers and coastal barges.
The port used to generate most of its revenue and tonnage from imported oil, but this is changing. “We’ve already seen a 10 percent drop in imported oil and in the last two months or so, we’ve seen tremendous demand for space at our docks for oceangoing barges and Jones Act ships for outbound shipment to other U.S. ports,” LaRue said.
In addition, Koch Industries subsidiary Flint Hills Resources announced a $200 million project to retrofit one of its two Corpus Christi refineries to handle Eagle Ford crude for export.
The port authority in July sold to Occidental Petroleum for $89 million 816 acres on the ship channel it got back from the Navy two years ago.
Occidental plans to retrofit one of the berths and start a smaller $1 billion version of the Cheniere LNG plant that will to separate propane gas from the “very wet” Eagle Ford shale gas to produce LNG for export. “It puts the land back to work,” LaRue said, “and puts the land back on the tax rolls for the small community around it.”
Contact Peter T. Leach at email@example.com. Follow him on Twitter @petertleach.