The US has shifted from importing refined oil products like gasoline to exporting over 1 million barrels per day in 2012 and companies are positioning themselves to cash in on the trend.
The US has exported diesel fuel to Europe for years, which makes sense because demand for the fuel is much higher across the Atlantic than domestically, but with expanding domestic crude output and flat or declining US gasoline demand, it appears many more barrels of liquid transportation fuels will be headed to hungry overseas markets in the coming years.
To this end, Enterprise Products Partners – a midstream energy services provider – is expanding its US Gulf Coast facilities to handle product exports. “Over the past year, Enterprise has repurposed its Southern Complex in order to increase supply and market access, system flexibility and capacity. Storage capacity at the partnership’s Southern Complex facilities has more than doubled to approximately 12 million barrels; key pipeline segments serving major refining centers have been made bi-directional; and new interconnects provide access to major, third party interstate pipeline systems,” according to a press release.
Enterprise does not currently operate facilities that export gasoline or diesel fuel, but this project will allow them to do so. “This will be an entrée for us,” Enterprise spokesman, Rick Rainey told Breaking Energy.
“Our customers are essentially the refiners – we are the middle man in all this – providing access to overseas markets through our docking stations,” he said. “We don’t own the product. Through take-or-pay arrangements, our customers agree to a certain volume of product across the dock for a certain time.”
Keystone XL and other pipelines could soon be transporting several hundred thousand daily incremental barrels of crude oil and natural gas liquids to the Gulf Coast refining center. Once US demand is met by product volumes produced at those refineries, the additional barrels of jet fuel, diesel, gasoline and marine fuel could be loaded on ships destined for net-importing countries.
“This expansion is driven by the tremendous growth of U.S. crude oil production from the development of the shale plays coupled with an increase in Gulf Coast refining production and strong international demand for US refined products,” said Michael A. Creel, chief executive officer of Enterprise’s general partner.
This trend is not limited to the Gulf Coast, as East Coast refiners also anticipate declining gasoline demand in that market, the largest in the US. Even though New York harbor currently remains a net-import gasoline market, Phillips 66 representatives recently told Breaking Energy they are gearing up to export the vehicle fuel in the next few years as local demand decreases. The company currently exports diesel from its Linden, New Jersey refinery.
For its part, Enterprise will modify existing facilities to expand loading rates and shipping capacity. Some dredging is required to accommodate Panamax vessels at the Baumont Marine Terminal and Aframax vessels at their Mortgage Point facility, said Rainey. These modifications are scheduled to be completed in the first quarter and mid-2014 respectively.
“Our project addresses the need for these products in overseas markets,” Rainey said.
