The Port of Corpus Christi’s board has voted to issue up to $400 million in debt if it finds that it needs to self-finance the dredging of its ship channel to 54 feet deep. In the 28 years since approving the dredging project, Congress has never funded the federal share of the cost, and the new debt would allow Corpus Christi to move forward in the event that it cannot secure government support. The project would allow fuller loadings at what has quickly become America’s busiest port for crude exports.
From 2016 to 2017, Corpus Christi’s crude oil exports increased by nearly 270 percent, rising from about 80,000 bpd to 300,000 bpd in just one year. That volume could rise further if the channel were deepened, officials say. As an example, Occidental Petroleum is currently building terminal infrastructure at Corpus Christi that will allow it to load up to 1.4 million barrels aboard a 2.0 million barrel VLCC at the current navigable depth of 45 feet. As the depth of the port’s channel increases, the same terminal will be able to increase that amount, improving efficiency. A full loading would require 66 feet, but 54 feet would be an improvement. At present, the only terminal in the U.S. that can fully load a VLCC is the Louisiana Offshore Oil Terminal (LOOP), which uses offshore loading buoys rather than piers.
“Our customers tell us that larger, deeper draft cargo ships could save them 50 to 75 cents per barrel, a major global competitive advantage,” said Corpus Christi port chairman Charles W. Zahn in a recent statement. “At over 600 million barrels a year of energy exports in Corpus Christi alone, these transportation cost savings are in excess of $300 million per year for our Port customers.”
Texas congressional representatives had lobbied for the inclusion of a $225 million federal funding package for the dredging work in the FY2018 omnibus spending bill, which included billions in additional funding for a wide range of defense and domestic programs. They were not successful, however, and the port has moved forward to authorize a self-financing fallback option. It has already reached an agreement with the U.S. Army Corps of Engineers to provide advance funding for the first $32 million stage of the project, and hopes to finish the full $327 million scope of work by 2021.
To accelerate the process, members of the Texas Congressional delegation have asked the administration to give the port greater autonomy as it moves forward. “The Port of Corpus Christi currently has the funding available to deepen and widen the Port, but they’re having to navigate with the Army Corps of Engineers, which can be at times slow and cumbersome and can lead to unnecessary project delays,” said Senator Ted Cruz (R-TX) at a recent hearing with Energy Secretary Rick Perry. “One solution is to modify the Army Corps of Engineers’ regulations to grant more authority for Ports to execute Army Corps of Engineers’ projects.”
Perry does not have authority over the Corps, which is housed under the Department of Defense, but he concurred. “They aren’t coming up here and asking for more money,” he said. “They are asking for federal agencies to get out of the way to give them approval.”