29 Mar 2014 More

Houston Ship Channel Shutdown Halts NGL Exports

posted by Brown Books @ 12:52 0 Comments

Image of the Houston Ship Channel
Houston Ship Channel traffic is still at a standstill with more than 100 vessels waiting to either enter or leave the port.  The collision that released more than 100,000 gallons of crude oil is still threatening wildlife there and officials are unclear as to when the channel will be opened to traffic again.

The collision between a crude-oil barge and another ship occurred at 10AM Saturday spilling the sticky substance into the bay.  Officials still don’t know which way the oil might flow.

While dangers to the wildlife and the environment are of course foremost in officials minds, still there is the pressing question of what to do with all those seagoing vessels carrying all that NGL headed for ports beyond.

Only making matters worse

If Houston was just one of many ports exporting much-needed natural gas liquids, that would be one thing.  But the truth is that most all NGL exports go through the Houston Ship Channel, one of the busiest ports in the world and getting more so every day.

“That’s all going to go offline,” says Peter Fasullo, of Houston-based energy consultant EnVantage Inc.. “Ships can’t get into the terminals to get loaded, and those that are loaded can’t get out.”

Most US NGL capacity must pass through the Houston Ship Channel, and when that comes to a halt, there’s a real big problem.  On average, the United States exports as much as 475 mbpd NGL.  That’s up from 164 mbpd in 2010, almost a 200 percent increase.  Houston has a capacity of 380 mbpd, this according to Targa Resource Partners

Butane and propane

Enterprise Products of Houston operates both a 5 and 14 mbph facility right on the channel itself.  Operations at the facility are said to be limited at best in the wake of the spill. Targa has the resources to export anywhere from 115 to 130 mbopd from its terminal in Galena Park.

NGL exports like propane and butane are up by 67 percent from 2009, this attributed in part by the shale gas boom in the Permian Basin and Eagle Ford Shale regions of West and South Texas respectively.

According to the EIA, the United States exported 626 mbpd NGL in December alone.  Compare that to 1.2 mmbpd of desalted fuel and 576 mbpd of motor gasoline.

Besides the ship channels obvious proximity to the active oil and gas fields in west and south Texas, it is close by to Mont Belvieu, Texas, home of the largest NGL storage facility in the world.

Is the channel maxed out already?

For those who believe the Houston Ship Channel has already been stretched too thin, this latest accident only bolsters their position.  But many companies do not share that view as evident by the $35 billion in new projects and expansions planned already in the area.

“The industry has to think about how much infrastructure the channel can really handle,” says Fasullo. “Because we’re putting a whole lot of traffic on one waterway.”

Phillips66 and Occidental Petroleum both agree, planning to build new NGL export terminals at other Texas ports.  For some the argument is simple, there is just a limit to the capacity of any one port.  Occidental says it plans on building a pipeline straight from Mont Belvieu to the port of Corpus Christi, Texas.


“It’s like your personal portfolio,” says Jim Webster, Phillips 66’s general manager of midstream business. “You want to diversify your risk, whether that’s in bonds and stocks or whether that’s in where fractionation capacity is and what waterways are used.”

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courtesy of Philip Loyd, Brown Editor

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