Petrochemical Ports: Gulf Coast Rising

Cheap natural gas is feeding an explosion in chemical and petrochemical exports.

Just as southern California is the nation’s top magnet for containerized cargo, so is the Gulf Coast the most attractive hub for movements of petrochemicals. Led by Houston and New Orleans, petrochemical activity is thriving due in no small part to growth in refining activity and an abundance of cheap natural gas.

“America’s shale gas revolution could lead to dramatic growth in U.S. chemical exports over the next 15 years,” says a new report from Nexant, Inc. sponsored by the American Chemistry Council. “Gross exports of chemical products, including plastics, linked to plentiful and affordable natural gas are projected to double from $60 billion in 2014 to $123 billion by 2030. The U.S. trade surplus for the selected chemicals is projected to increase from $19.5 billion to $48.3 billion over the same period with China, Mexico and other Americas remaining the leading net export destinations.”

City-Data, a private-sector organization that tracks and analyzes economic trends around the country, says the Houston-Baytown-Huntsville area has nearly 40 percent of the nation’s capacity for producing the basic chemicals used in refining and chemical manufacturing with 405 plants employing about 36,000 people. The proximity of these plants to ports like Houston and New Orleans makes these ports ideal departure points for chemical and petrochemical exports.

In Houston, for example, the 15.6-acre Manchester Terminal specializes in the handling of petrochemicals and other liquid bulk products. Located by the Houston Ship Channel Turning Basin eight miles from downtown and 52 miles from the Gulf of Mexico, the facility is under lease to Oxid L.P., Westway Terminal Co., South Coast Terminal and Valero Refining. Its two docks are 500 feet and 570 feet long with a water depth of 36 feet.

All Turning Basin wharves except Nos. 1-4 are served by rail. The Port Terminal Railroad Association provides switching links to both the Burlington Northern Santa Fe and Union Pacific railroads. More than 150 truck lines serve the Turning Basin, which is five miles from Interstate Highways 10 and 45.

Farther east along the Gulf Coast, the shale gas boom has precipitated an unprecedented amount and variety of investments in Louisiana, which in turn has benefited the Port of New Orleans, which is gearing up for two waves of petrochemical-related cargo volume increases. The first, already in progress, involves imported project cargoes of components for building and expanding chemical plants, and the second consists of exports of the facilities’ products.

The port has invested more than $100 million in capital improvements since 2012 and plans to expand its Napoleon Avenue Container Terminal to handle up to 1.5 million 20-foot container equivalents (TEU) of cargo annually by 2020. An underway expansion of the Mississippi River Intermodal Terminal and Yard is due for completion next February.

Out west, refining activity along a stretch of Interstate 80 east of San Francisco Bay’s northeast shoreline generates a good deal of crude oil imports (mainly from Alaska but also, increasingly, from North Dakota) into the Port of Richmond, 12 miles north of Oakland. Richmond calls itself the Bay Area’s liquid bulk and auto tonnage leader. Chevron, Phillips 66, Shell, Tesoro and Valero operate plants along the I-80 corridor.

The port lists its Point Potrero Marine Terminal as an import, storage and distribution facility for liquid and dry bulk cargoes as well as breakbulk and autos. The terminal has a 2,300x135-foot concrete wharf; a 550x50-foot concrete pier; berths of 1,620, 300 and 400 feet; and two warehouses totaling 170,000 square feet. It connects to the Burlington Northern Santa Fe Railway.

The Port of Vancouver, Washington specializes in handling dry and liquid bulk commodities including petrochemicals, spokeswoman Katie Odem said. The port announced in August 2013 that it had leased 42 acres of land to Tesoro Corp. and Savage Logistics LLC, which jointly are building and will operate a crude oil shipping facility called the Vancouver Energy Distribution Terminal. Shipments from the Bakken formation in North Dakota will arrive by rail and then move by water to refineries elsewhere in Washington State as well as in Alaska and California.

FTZs

At a number of U.S. ports petroleum or its byproducts move through Foreign Trade Zones, duty-free unless they leave the zones for domestic destinations. Most of the goods handled at FTZ 50 in Long Beach are containerized, but liquid bulk crude oil accounts for a sizeable volume, says Gina Barro, the port authority’s Business Development Manager. Oil received at the port’s marine terminals move via pipeline to refineries that produce gasoline, jet fuel, diesel fuel, petroleum coke, propylene and other petrochemicals. The goods are then shipped via connections to product distribution pipelines and terminals. Most have domestic destinations.

Refined oil products represent the highest volume of cargo at FTZ 202 in neighboring Los Angeles though they amount to a relatively small percentage of the port’s total tonnage, port authority spokeswoman Rachel Campbell explains. Container shipments are the mainstay activity at both Los Angeles and Long Beach, respectively, the nation’s busiest and second-busiest container ports.

On the East Coast, liquid bulk petroleum products imported mainly from Venezuela and handled at FTZ 136 account for about 45 percent of the cargo volume at Port Canaveral, Florida, spokeswoman Rosalind Harvey said. The port has two petroleum tank farm customers, Seaport Canaveral and TransMontaigne. – MarEx

2014 U.S. Chemical Exports by Destination ($ Billions)
1	Mexico	7.8
2	Canada	5.7
3	Belgium	4.2
4	China	3.7
5	Brazil	2.8
6	Japan	2.6
7	Korea	2.4
8	Netherlands	2.3
9	Taiwan	1.4
10	Germany	1.2

 

Source: American Chemistry Council