Enterprise Receives Deepwater Port License for Spot Project

Rhea-AI Summary

Enterprise Products Partners L.P. (EPD) has received the deepwater port license for the Sea Port Oil Terminal (SPOT) from MARAD, enabling the development of an offshore terminal to load 2 million BPD of crude oil. This milestone enhances U.S. crude oil exports, offering a more environmentally friendly and cost-effective solution for global markets.

Insights

Energy Sector Analyst

The granting of the deepwater port license to Enterprise Products Partners for the Sea Port Oil Terminal (SPOT) by the United States Maritime Administration is a pivotal development for the company and the energy sector at large. This authorization indicates a significant expansion in infrastructure, enabling Enterprise to potentially handle an additional 2 million barrels per day of crude oil. This capacity is substantial when considering the current U.S. crude oil export levels of approximately 4 million BPD. The expansion is poised to enhance the efficiency of crude oil delivery to global markets, potentially lowering transportation costs due to economies of scale.

From an economic standpoint, this project could lead to a more competitive positioning for U.S. crude on the global stage, possibly affecting global oil prices and trade dynamics. The SPOT facility's ability to offer a more environmentally friendly alternative to existing methods could also align with increasing regulatory and investor focus on environmental sustainability within the energy sector. However, the capital expenditure required for this project and its impact on Enterprise's financials, will be an important factor to monitor.

Environmental Policy Expert

Enterprise's receipt of the deepwater port license signifies not only a business milestone but also an environmental commitment. The claim of SPOT offering a 'more environmentally friendly' means of crude oil transportation will be under scrutiny by environmental groups and policy makers. It is important to evaluate whether the offshore terminal adheres to stringent environmental regulations and best practices to mitigate the impact of such large-scale operations on marine ecosystems.

Additionally, the long-term implications on climate change commitments and the transition to renewable energy sources must be considered. While the project may present short-term economic benefits, it also raises questions about the alignment with broader environmental goals. The balance between economic growth, energy demand and environmental stewardship will be a key area of focus for stakeholders.

Maritime Industry Analyst

The operational capabilities of SPOT could introduce shifts in maritime logistics, particularly affecting tanker traffic patterns and port operations. The terminal's projected capacity to load 2 million BPD of crude oil suggests a significant increase in large tanker movements, which could lead to changes in shipping rates and insurance premiums. It is essential to consider the impacts on local port infrastructure, including the need for upgrades to accommodate increased traffic and the potential for bottlenecks.

Moreover, the strategic location of the SPOT terminal could influence regional competition among ports and the broader geopolitical landscape of oil exports. The efficiency gains from a deepwater port could give U.S. crude a logistical advantage, possibly reshaping trade routes and partnerships. Stakeholders should be attentive to the ripple effects across the maritime industry.

HOUSTON--(BUSINESS WIRE)-- Enterprise Products Partners L.P. (NYSE: EPD) (“Enterprise”) today announced that it has received the deepwater port license for the Sea Port Oil Terminal (“SPOT”) from the United States Maritime Administration (“MARAD”), an agency within the federal Department of Transportation. The license enables Enterprise to move forward to the next step in developing the offshore terminal capable of loading 2 million barrels per day (“BPD”) of crude oil.

“I would like to congratulate the entire Enterprise team, which demonstrated outstanding technical skills, dedication and perseverance over the past five years, allowing us to receive this license,” said A.J. “Jim” Teague, co-chief executive officer of Enterprise’s general partner. “With U.S. exports of crude oil at 4 million BPD, SPOT offers a more environmentally friendly, safe, efficient and cost-effective way to deliver crude oil to global markets. The receipt of the license is the most significant milestone to date in the development and commercialization of SPOT.”

Since the original application for a deepwater port license was submitted in January of 2019, Enterprise has worked diligently with various federal, state and local authorities, and participated in multiple public meetings that have allowed individuals and stakeholder groups to learn about the project and provide their comments to multiple environmental impact studies, including those translated into Spanish and Vietnamese. The exhaustive analysis associated with the project and continuous responses to requests for information from the various agencies produced more than 30,000 pages of documentation.

As planned, the SPOT offshore platform would be located approximately 30 nautical miles off the Brazoria County, Texas coast in 115 feet of water, and will be manned 24 hours per day. The facility is designed to load VLCCs and other crude oil tankers up to a rate of 85,000 barrels per hour. In addition, dual 36-inch diameter, bi-directional pipelines would be built that connect to the company’s new Oyster Creek crude oil terminal in Brazoria County that would be constructed approximately 10 miles inland. With a direct connection to Enterprise’s Houston ECHO terminal, as well as the company’s extensive integrated midstream network, SPOT would offer access to more than 40 distinct grades of crude oil, including Midland WTI.

SPOT reduces operational risks, including those associated with reverse lightering, an unregulated process in which crude oil is offloaded from multiple smaller ships onto a larger vessel in federal waters off the U.S. Gulf Coast. Limiting reverse lightering, combined with the SPOT platform’s state-of-the-art vapor combustion capabilities, would significantly reduce emissions.

“Compared with the current industry practice of reverse lightering, SPOT is expected to reduce crude vapor emissions by 95 percent, and lower total greenhouse gases by 65 percent,” said Teague. “Considering that as many as eight smaller vessels are required during the reverse lightering process, SPOT offers a safer alternative and reduces the potential for accidents and spills. At full capacity, SPOT would eliminate more than 900 ship-to-ship transfers in federal waters annually. The SPOT platform would also serve as a reef, supporting marine life.”

MARAD and U.S. Coast Guard led the comprehensive, four-year environmental review of this project. The reviews by more than a dozen federal governmental agencies, including the Army Corps of Engineers and Environmental Protection Agency, as well as reviews and approvals by the State of Texas. Highlighted below, are some of the notable findings from the record of decision, which SPOT received in November 2022:

• “The construction and operation of the Port is in the national interest because the Project will benefit employment, economic growth, and U.S. energy infrastructure resilience and security. The Port will provide a reliable source of crude oil to U.S. allies in the event of market disruption and have a minimal impact on the availability and cost of crude oil in the U.S. domestic market. Construction and operation of an offshore export terminal and the installation of a vapor combustion system at the DWP [deepwater port] will reduce the number of ship-to-ship transfers of crude oil and lessen emissions from conventional crude oil loading, thus providing a more efficient, less impactful crude oil transport facility within the offshore waters of the United States.”
• “The Project will be constructed and operated using the best available technology. Operating safety and control features of the Project will include autonomous shutdown valves, HIPPs, fire and gas detection, emergency shutdown and safety controls, and process control systems.”

Enterprise Products Partners L.P. is one of the largest publicly traded partnerships and a leading North American provider of midstream energy services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals. Services include: natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage and marine terminals; crude oil gathering, transportation, storage and marine terminals; petrochemical and refined products production, transportation, storage, and marine terminals and related services; and a marine transportation business that operates on key U.S. inland and intracoastal waterway systems. The partnership’s assets include more than 50,000 miles of pipelines; over 300 million barrels of storage capacity for NGLs, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity. Please visit www.enterpriseproducts.com for more information.

This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission. All statements, other than statements of historical fact, included herein that address activities, events, developments or transactions that Enterprise and its general partner expect, believe or anticipate will or may occur in the future are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations, including required approvals by regulatory agencies, the possibility that the anticipated benefits from such activities, events, developments or transactions cannot be fully realized, the possibility that costs or difficulties related thereto will be greater than expected, the impact of competition, and other risk factors included in Enterprise’s reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Except as required by law, Enterprise does not intend to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240409819608/en/

Randy Burkhalter, Investor Relations, (713) 381-6812 or (866) 230-0745

Rick Rainey, Media Relations (713) 381-3635

Source: Enterprise Products Partners L.P.

FAQ

What license did Enterprise Products Partners L.P. (EPD) receive?

Enterprise received the deepwater port license for the Sea Port Oil Terminal (SPOT) from MARAD.

How much crude oil can the offshore terminal developed by EPD load per day?

The offshore terminal can load 2 million barrels per day (BPD) of crude oil.

When was the original application for the deepwater port license submitted by EPD?

The original application for the deepwater port license was submitted in January of 2019 by EPD.

Who congratulated the Enterprise team for receiving the license?

A.J. 'Jim' Teague, co-chief executive officer of Enterprise's general partner, congratulated the entire Enterprise team.

What is the significance of the license for the development of SPOT?

The receipt of the license is the most significant milestone to date in the development and commercialization of SPOT.