BY STEVE CLARK | STAFF WRITER Brownsville Herald
Centurion Terminals LLC broke ground on its Port of Brownsville terminal project in September anticipating that a 40-year U.S. ban on crude oil exports was about to be lifted.
That came to pass in mid-December, with the first post-ban shipment of domestic crude steaming from Corpus Christi on New Year’s Eve.
The Brownsville terminal will take delivery of condensate — a type of extremely light crude oil — by Union Pacific tank cars from the Permian Basin in West Texas at the rate of about 120 cars a week. The condensate will be processed into diesel and naphtha (made into gasoline by adding octane) mostly for export.
Peter Schmar, Centurion’s executive vice president of operations, said demand for those products across the border is substantial. Mexico is the primary customer, though shipments could go to other Latin American countries and possibly even Europe and Asia, he said.
“There have been some regulatory changes in Mexico that happened to coincide with our project,” he said. “We’re fortunate that the timing is good, even though crude oil is trading at a very low level.”
A barrel of crude costs about $30 on the commodities market, the lowest it’s been since 2004.
“We’re betting that by the time we’re operational the crude-pricing paradigm will have shifted,” Schmar said.
The terminal will feature four 200,000-barrel storage tanks, six 100,000-barrel tanks and peripheral tanks for a total capacity of 1.5 million barrels and, initially, two “fractionating” towers capable of processing 50,000 barrels of condensate a day. Schmar said the project should be operational in summer 2017.
Condensate isn’t new to the port, said Eduardo Campirano, port director and CEO.
“That stuff has been coming to the port, primarily by truck,” he said. “We’ve been handling liquid commodities out here for a long, long time — petroleum-based commodities, refined products.”
A big one is No. 6 fuel oil, which comes from Mexico by rail to the port, where it’s loaded onto barges for shipment to refineries up the Texas coast.
“Mexico has certain limitations in its refineries, and one of those is refined products,” Campirano said. “What they can’t handle they’ll send here.”
The fuel oil tank cars are identifiable by a blue stripe on the rear, he said.
“We call those ‘blue moons,’” Campirano said. “That’s all Pemex product coming across the border.”
A ConocoPhillips Safety Data Sheet lists condensate liquid and vapor as “highly flammable” and “toxic to aquatic life with long lasting effects.” Schmar said any type of crude oil product has to be handled carefully.
“As far as volatility is concerned it’s not under pressure,” he said. “The vapor on this condensate is relatively low.”
Alan Simon, vice president of industrial development for Denver-based OmniTRAX, which is under a 30-year contract to operate the port’s Brownsville & Rio Grande International Railway, said the rail cars that carry condensate must comply with federal regulations.
“We are actively collaborating with Union Pacific ... and collaborating with Centurion to ensure the safe transport and handling of product,” he said.
“This kind of products moves around the country every day, but we want to point out the safe operating record of OmniTRAX and the BRG specifically handling these kinds of products,” Simon said.
“Safety is very important. A lot of time and effort is going into making sure the products move safely and there are no problems.”
Schmar said construction of the project could create more than 300 construction jobs and that, once complete, the terminal will employ a staff of between 50 and 100. The operation will have a significant indirect economic impact as well, he said.
Campirano said the port was poised to gain from a lifting of the U.S. crude oil export ban, implemented in response to the Arab oil embargo of the mid-1970s.
“You’re going to see the export of that crude through Gulf coast ports,” he said. “Brownsville is no different as a consideration for that export, as might be any other port.”