Enterprise, Oiltanking Holdings to build Texas offshore oil port

Enterprise Products Partners and Oiltanking Holding Americas have formed a joint venture to design, construct, own, and operate a new Texas offshore crude oil port and pipeline system to facilitate delivery of waterborne crude oil to refining centers along the upper Texas Gulf Coast.

Offshore staff

HOUSTON -- Enterprise Products Partners and Oiltanking Holding Americas have formed a joint venture to design, construct, own, and operate a new Texas offshore crude oil port and pipeline system to facilitate delivery of waterborne crude oil to refining centers along the upper Texas Gulf Coast.

The Texas Offshore Port System (TOPS) project will include an offshore port, two onshore storage facilities with approximately 5.1 MMbbl of total crude oil storage capacity, and an associated 160-mi (257-km) pipeline system with the capacity to deliver up to 1.8 MMb/d of crude oil. System capacity could be expanded with construction of additional offshore facilities, the companies say. Development of the offshore port system and onshore infrastructure is supported by long-term contracts with Motiva Enterprises and an affiliate of Exxon Mobil Corp., which together have committed a total volume of approximately 725,000 b/d.

TOPS is designed to allow operations 24 hours per day without restrictions on movements and vessel size that limit most ship channels. TOPS would be able to accommodate the largest vessels which can carry approximately 3 MMbbl of crude oil. The location of TOPS is also designed to avoid delays and risks related to fog, navigation hazards, and channel closures on coastal waterways.

The TOPS project involves construction of a deepwater port located approximately 36 mi (58 km) offshore from Freeport, Texas, and an onshore distribution and storage system. As designed, the deepwater port will feature two single-point mooring buoys that will essentially serve as floating docks for the vessels. Located in about 115 ft (35 m) of water, the buoys will be able to offload crude oil at rates up to 100,000 barrels per hour.

A subsea pipeline will connect the buoys to the onshore distribution system near Freeport. Using directional drilling techniques to minimize beach impact, the TOPS pipeline system will run from the offshore port shore crossing to Freeport and extend along the Texas Gulf Coast to Texas City, Texas, connecting to a 3.9-MMbbl crude oil storage facility. From there, the pipeline would connect to existing crude oil pipeline systems currently serving the Texas City and Houston Ship Channel refineries.

A separate but complementary component of TOPS would involve construction of a 75-mi (56-km) pipeline extending from Texas City to its terminus at a planned storage facility with 1.2 MMbbl of crude oil capacity near Port Arthur, Texas. The storage tanks are designed to connect to various refineries and other facilities via pipelines. This pipeline system would have the added capability of delivering waterborne and offshore crude oil from existing Texas City docks and storage facilities to all Port Arthur/Beaumont area refineries.

Affiliates of Enterprise, TEPPCO, and Oiltanking each have a one-third ownership in the new joint venture and expect to invest approximately $600 million each in the initiative, which, subject to obtaining certain regulatory approvals and permits, is scheduled to begin service in 4Q 2010.

"With refining capacity along the upper Texas coast continuing to expand, TOPS offers a comprehensive solution for ensuring reliable access to supplies of crude oil," says Michael A. Creel, president and CEO of Enterprise. "This project should provide refiners with cost savings, operating efficiencies and access to additional supplies beyond the Gulf Coast region. We are very pleased to be working with our joint venture partners, each of which brings complementary assets and expertise in the crude oil logistics business. In addition, TOPS should provide Enterprise with a new source of fee-based cash flow for decades to come."

08/18/2008

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