April 10, 2014 / 10:36 PM / 3 years ago

NuStar joins growing crude dock expansions in south Texas

4 Min Read

CORPUS CHRISTI, Texas, April 10 (Reuters) - The port of Corpus Christi, Texas, is undergoing its biggest expansion in years as energy companies hurriedly add docks so they can ship more crude to other U.S. ports - and perhaps one day to foreign locales as well.

Pipeline company NuStar Energy LP has added a third ship dock, doubling its loading capacity to 400,000 barrels per day at the port, which is near the Eagle Ford formation in south Texas, one of the most productive oil fields in the world.

The addition, which went into operation in mid-February and was shown to the media on Thursday, means NuStar's operation can handle Panamax-class vessels, which can carry 350,000 to 500,000 barrels, at loading rates of up to 30,000 barrels per hour.

NuStar can now jump into the global crude game if the decades-old U.S. ban on crude exports is lifted. Many oil producers favor repealing the ban now that domestic oil output has surged to a 25-year high.

"Obviously we're ready," for global exports if restrictions are lifted, said NuStar Chairman Bill Greehey. "We're exporting crude now to other refineries in the United States."

"Everyone's always worried about supply going down and so you keep the reserves," he said. "But you've got to give the producers incentive to produce. You ought to let them export." "Crude is such a political thing," he said with a sigh.

In February 2012, shipments at the Corpus Christi port approached just 4,000 barrels per day, according to port data.

That rose to 319,694 bpd in February 2013 and 345,632 bpd two months ago, largely because of shipments to refining centers in Houston and Louisiana, the data showed.

In the interim, pipelines started up to move crude from the Eagle Ford oil patch to those markets, as well as to Corpus Christi.

Eagle Ford output keeps growing and is projected to reach 1.36 million bpd in April, according to the U.S. Energy Information Administration.

Moving crude by water gives customers more logistical flexibility alongside pipelines and railroads.

Bigger Docks Wanted

The dock project was part of NuStar's $185 million, multi-phase build-out of the company's South Texas Crude Oil pipeline.

NuStar's marketing director, Danny Oliver, said the pipeline will be moving 350,000 bpd to Corpus by mid-2015, up from 250,000 bpd.

Other companies expanding or improving their Corpus Christi docks to move more Eagle Ford crude include Trafigura AG , Magellan Midstream Partners, Plains All American and Martin Midstream Partners. Trafigura's second new dock is already running.

According to the port, nine new oil docks either have been built or are being built since late last fall. They were the first since the 1980s. Most will handle oil.

Companies increasingly prefer Corpus Christi because it doesn't experience the kind of shutdowns - fog related or otherwise - suffered by the much larger Houston Ship Channel, which feeds plants with more than a tenth of U.S. refining capacity.

"Here, we're not burdened like the Houston Ship Channel," NuStar Chief Executive Brad Barron said. The channel was shut for days in March after an oil barge hit another ship, spilling fuel oil. (Additional reporting by Sabina Zawadzki in New York; Editing by Terry Wade)

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