Enterprise Products in deal with Chevron to develop crude oil port

HOUSTON (Reuters) - Pipeline operator Enterprise Products Partners LP EPD.N signed long-term agreements with Chevron Corp CVX.N that advance its proposed offshore crude project in the U.S. Gulf of Mexico, the companies said on Tuesday.

FILE PHOTO: A Chevron gas station sign is seen in Del Mar, California, April 25, 2013. Chevron will report earnings on April 26. REUTERS/Mike Blake

Enterprise’s Sea Port Oil Terminal, or SPOT, is one of at least eight similar projects off the Texas and Louisiana coasts proposed to export oil from the region’s shale fields.

It would compete with projects under development by commodities trader Trafigura Ltd, private equity firm Carlyle Group CG.O, and pipeline operators Magellan Midstream Partners MMP.N, Tallgrass Energy LP TGE.N, and Phillips 66 PSX.N.

All the projects aim to carry rising shale production from the Permian Basin of West Texas and New Mexico to overseas markets. A total of 2.3 million additional barrels per day of shale is expected to reach the U.S. Gulf Coast in the next year as volumes rise and new pipelines begin operation.

Enterprise declined to say whether Chevron would take a financial stake in the project, or whether Chevron would become a customer for a Permian crude pipeline that it calls Midland-to-Echo 3. Chevron was unavailable to comment.

The value of the agreements was not disclosed. Enterprise is due to release its second-quarter results on Wednesday and could provide more details then, spokesman Rick Rainey said.

Chevron agreed to use Enterprise’s crude oil transportation, marine terminals and storage facilities, which include its Houston storage facilities, the companies said.

SPOT is planned for a site in 115 feet (35m) of water, about 40 miles (64 km) off the coast of Houston. Up to two very large crude carriers (VLCCs) could moor at the site and load up to 2 million barrels per day.

The facility would connect to an onshore tank farm able to hold up to 4.8 million barrels of crude oil, according to its federal permit application.

Construction of the project is subject to the required approvals and licenses from the federal Maritime Administration, which is currently reviewing the application.

Reporting by Shanti S Nair in Bengaluru and Gary McWilliams in Houston; editing by Bernard Orr and Dan Grebler