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Enterprise SPOT project facing new delays

July 15/2020

MOSCOW (MRC) -- Enterprise Products Partners' planned Sea Port Oil Terminal offshore of Houston is facing new delays now that the federal government has stopped the clock on the licensing process to allow Enterprise more time to answer questions and provide additional information, reported S&P Global.

The regulatory US Maritime Administration said it suspended the timeline for the SPOT project that is the leading contender to be the first deepwater Texas terminal built to export crude oil around the world.

"SPOT provided some responsive information but also notified the US Coast Guard that additional time would be needed to fully respond," MARAD noted in a new letter to Enterprise.

The delay is not particularly surprising because Enterprise said in late April that it no longer expected to receive federal approval for SPOT in 2020 amid the coronavirus pandemic and the global collapse in crude oil demand. Enterprise had previously planned to start construction as soon as this summer and open the terminal in 2022 after receiving its federal license no later than June. However, the two-year construction timeline now pushes the project's completion to at least 2023.

Enbridge partnered with Enterprise on the SPOT project in December - abandoning its competing Texas COLT project in the process - and Chevron already is signed on as the anchor customer.

SPOT is proposed to be built about 30 miles offshore of Freeport, which is due south of Houston. The deeper-water depths offshore are needed for Very Large Crude Carriers to load up to capacity. SPOT would be able to load 2 million b/d and simultaneously two VLCCs at a time.

Enterprise has remained committed to the project though.

"The company is working on addressing information requests from USCG/MARAD, reviewing submittals from the public comment period, as well as other input from landowners and public officials," Enterprise spokesman Rick Rainey said in a late June 8 statement. "This work includes evaluating options to meet our business needs while mitigating concerns that have been expressed. We are in regular communication with USCG/MARAD and other federal and state regulators to help assure that these considerations are integrated smoothly into the permitting process."

The project has faced opposition from environmental groups and some local communities.

As of early this year, there was a race to build the first deepwater oil exporting terminals offshore of the crude oil hubs near Houston and Corpus Christi. However, the coronavirus pandemic has put that race on hold -- if not canceling the race outright.

Multiple proposed offshore oil-exporting terminals already were shelved or merged with other projects even before the pandemic.

The only other project with substantial backing thus far is Phillips 66's and Trafigura's planned Bluewater terminal offshore of Corpus Christi.

Pearce Hammond, a midstream analyst with Simmons Energy, questioned on June 9 whether any of them will be built.

"The bigger issue at this point, in our view, is how needed is the terminal in light of the changed dynamics for the US oil market post COVID?" Hammond stated in a note. "Does the terminal get built because it is a much cheaper and more efficient means of exporting crude (and replaces existing less efficient crude export terminal capacity), or does the terminal not get built because the global need for higher US crude exports has been redefined lower post COVID? Time will tell."

Already, US crude exports in 2020 have fallen from a high of 4.38 million b/d for the week ending March 13 down to 2.79 million b/d for the week ending May 29, according to the US Energy Information Administration. And analysts project crude export volumes to further plunge in the coming months.

Only one Gulf of Mexico port, LOOP, can fully load VLCCs currently without lightering from smaller vessels. However, LOOP was built primarily for imports and has only more recently added crude-exporting capacilities.

As MRC reported earlier, Enterprise Products Partners LP (EPP), through one of its affiliates, has entered a long-term agreement with Marubeni Corp. of Japan, under which Marubeni will offtake polymer-grade propylene (PGP) produced from a second propane dehydrogenation plant (PDH 2) currently under construction at EPPs operations in Mont Belvieu, Tex., for supply to global customers. Concluded on June 16, the PGP offtake agreement is part of a long-term collaboration between EPP and Marubeni that also includes the export of liquefied ethylene, the first 25-million lb vessel of which loaded and sailed from EPP and Navigator Holdings Ltd.s 50-50 joint venture marine terminal at Morgans Point, Tex., in early January, EPP and Marubeni said on June 30.

Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).

According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 595,170 tonnes in the first five month of 2020, up by 10% year on year. Deliveries of all ethylene polymers, except for linear low density polyethylene (LLDPE), rose partially because of an increase in capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market was 457,930 tonnes in January-May 2020 (calculated by the formula production minus export plus import). Deliveris of exclusively PP random copolymer increased.
Author:Margaret Volkova
Tags:PP, PE, LLDPE, crude and gaz condensate, PP random copolymer, propylene, ethylene, petrochemistry, Enterprise Products, Phillips 66, Rossiya, USA.
Category:General News
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