Port of Corpus Christi, Carlyle Group To Develop Crude Oil Export Terminal
The Port of Corpus Christi Authority announced October 29 that it has entered into an agreement with private equity firm The Carlyle Group to develop a major crude oil export terminal on Harbor Island. As part of the deal, a 75-foot channel to the site would be dredged and paid for privately.
The terminal would be the first onshore location in the U.S. capable of providing export service to fully-laden Very Large Crude Carriers (VLCCs) and would further the port’s position as the pre-eminent global crude oil export hub.
The port said that VLCC access would further open the global markets for U.S. oil producers, pipelines, their supply chains and customers. The result could produce up to a $50 billion annual reduction to the national trade deficit. The city of Corpus Christi would benefit from the thousands of direct and indirect jobs as well as billions in incremental economic activity, the port said.
Under the terms of the agreement, the port will work exclusively with Carlyle to bring together oil producers, marketers, pipeline operators and marine terminal operators to ensure that a significant portion of the new oil production in Texas will have a reliable gateway to international markets.
Carlyle agreed to lead the construction and ongoing operations of the Terminal on an exclusive basis. Carlyle also agreed that it would arrange for a private funding solution for a dredging project to bring fully-laden VLCCs to Harbor Island (at least a 75-foot main channel depth).
Construction of the terminal would require no capital outlay from local taxpayers, the port said. Instead, the project would be funded by regular rental payments, volume-based tariff income, land grants and other proceeds that will help the port fund other aspects of its operations. The terminal is expected to be operational in late 2020. Carlyle’s equity for this investment will come from its Global Infrastructure Fund.
The terminal would include the development of at least two loading docks on Harbor Island as well as crude oil tank storage inland across Redfish Bay on land secured by Carlyle, enhancing operational flexibility while reducing the facility’s footprint on Harbor Island itself.
The project is subject to agreement on definitive documentation between the parties, satisfactory completion of due diligence and final approval from Carlyle’s investment committee.
“A project of this magnitude further underscores the vital role the Port of Corpus Christi plays in the global energy markets and as an important economic generator for the great state of Texas,” said Sean Strawbridge, CEO of Port of Corpus Christi. “In partnering with such an experienced and well-capitalized firm as The Carlyle Group, the market should take notice and have a high degree of confidence of this project’s success.”