Texas driving downstream expansion
More than $200 billion is expected to be invested in the U.S. petrochemical sector as the region becomes an energy exporter, and nearly half of the new projects announced since 2010 are in Texas, an industry trade association told Petrochemical Update.
The American Chemistry Council’s (ACC) running tab of 334 announced projects represents a cumulative investment of $205 billion for the U.S. to date. Of those, 148 are in Texas and represent $87.0 billion, or roughly 43% of the total U.S. investment.
At least 90% of the projects are in the Gulf Coast Region. 44% are complete, and 54% are under construction or in the planning phase.
Texas as exporter
Trade is booming in the U.S and poised to drive chemical exports even higher. The latest ACC estimates are forecasting a $70 billion trade surplus by 2025. The U.S. chemical industry posted a $39 billion trade surplus in chemicals in 2018 as exports rose 10% to $143 billion and imports rose 7.8% to $105 billion, according to the ACC.
Last year, petroleum and coal products were the number one manufacturing export sector for Texas, accounting for more than 17% of total state exports.
Houston is the top US crude oil exporter, shipping out about 2.5 million b/d. The port also is the top U.S. polyethylene (PE) resin exporter, accoding to trade data.
Nearly 14 million tonnes of PE capacity is expected to be added from 2017-2027, and more than 75% of which will be in Texas and Louisiana.
Of the 14 million tonnes, a little more than 20% is now in operation and mostly along the Houston Ship Channel.
U.S. producers are expected to add 12.1 million tonnes of PE just before 2022.
Houston Ship Channel
The Houston Ship Channel is the 52-mile federal waterway that is home to the greater Port of Houston’s more than 200 private and eight public terminals, and is considered the energy capital of the world. It is the busiest port in the U.S. in terms of foreign tonnage, and second-busiest in the U.S. in terms of overall tonnage.
Beginning in August 2018, the Houston port began to see the extra large container ships that exceed 1,100 feet in length. As these larger ships maket their way across the 23-mile stretch between the entrance to the channel and one of the port’s two container terminals, outbound tankers are forced to sit and wait until these large ships dock.
The bigger container ships cannot safely veer around tankers. All other oncoming traffic – whether waiting to get in or leave the channel – must stand down for up to 10 hours or more until the container ship passes.
Widen the Channel
Enterprise and Kinder Morgan are among the 13 companies that have banded together to form the Coalition for a Fair and Open Port, which wants to ensure consistent two-way traffic so that all Houston Ship Channel exports can grow alongside U.S. capacity growth.
The solution, many market players believe, is to widen the 530-foot-wide channel to at least 750-800 feet to accommodate two-way traffic that includes larger container ships.
Expansion of the Panama Canal, the growth of vessel sizes, and the region’s population growth have also resulted in record container demand, both for imported consumer goods and exported manufactured products, further driving the need for improvements to the channel.
The Port Commission of the Port of Houston Authority met in special session in April and moved to accelerate widening of the Houston Ship Channel.
The Port Authority is working with the U.S. Army Corps of Engineers and other representatives of the federal government, as well as Port of Houston and Houston Ship Channel stakeholders, to obtain authorization, and accelerated funding and completion, of a deepened and widened ship channel.
The commission also adopted a resolution to further maximize current two-way traffic transiting the Houston Ship Channel.
In order to ensure continued safe, unimpeded traffic of neo-panamax container vessels and other ships, under the terms of this new business rule, only one vessel that imposes “one-way traffic” on all deep-water ships transiting the Houston Ship Channel within Galveston Bay to call facilities within the Port of Houston may call on a Port Authority terminal in a given week. The Port says this is an interim solution intended to ensure unencumbered access to upper channel reaches.
The commission also budgeted $500,000 to support a traffic efficiency group for the channel. This newly-formed advisory committee representing multiple channel stakeholders will meet regularly and work in partnership with the U.S. Coast Guard Houston Area Vessel Traffic Service, the Lone Star Harbor Safety Committee, the Houston Pilots, and others.
The Coalition said the majority of ship channel business involves liquids and natural gas, and those interests cannot be jeopardized by two-way traffic disruptions.
In 2018, 71% of the 18,790 ships that traversed the channel involved energy – 55% tankers, 10.5% natural gas and 5.6% barges, according to the Houston Pilots.
Alternatives outside of Houston
The Port of Corpus Christi is marketing itself as an alternative to Houston for energy exports, highlighting its proximity to the Eagle Ford shale in South Texas and the Permian Basin.
The Carlyle Group is investing $400 million in a project awaiting regulatory approval to deepen the Corpus Christi Ship Channel to accommodate the veryt large crude carriers (VLCC) that can hold up to 2 million barrels of oil.
Owners have also looked at alternative shipping routes through Florida, South Carolina, Georgia and California.
Finding enough shipping containers to export product remains an issue as well, and the trade war isn’t helping without imports coming in.
By Heather McGuire Doyle
Overcoming and solving major engineering, construction, supply chain and workforce challenges will be key themes of the Downstream 2019 event.
In its 4th year and bigger than ever, the Downstream 2019 event will be held June 11 and 12 at the George R Brown Convention Center in Houston, Texas.
The conference team is expecting more than 7,000 exhibition visitors, 3,000 conference visitors, 350 exhibition booths, alongside hundreds of strategy panel sessions and technical sessions.
This year, Downstream 2019 adds two new sections to its list of dedicated conference tracks. Process Engineering and Workforce Development will be added to the traditional tracks: Major Projects, Small to Midsize Projects, Shutdowns and Turnarounds, and Reliability and Maintenance.
Visit the conference website to discover more today!