Corpus Christi port races to find money for oil export expansion
Channel must be dredged to allow huge tankers, but Congress has only committed to paying a fraction of the cost
Port officials hoping to expand Corpus Christi’s ship channel within four years are pushing lawmakers and federal agencies to commit more money and accelerate contracts to launch a project that would make the region the nation’s top oil exporter as demand surges overseas.
But so far, Congress has committed only a fraction of the money needed to dredge the channel deep enough to make room for massive oil tankers by 2021. Furthermore, myriad flood-related projects are competing for the Army Corp of Engineers’ time and resources in the wake of Hurricane Harvey.
“We’re getting penalized because of Hurricane Harvey,” said Sean Strawbridge, chief executive of the Port of Corpus Christi Authority. “We don’t want to miss this opportunity by being undercapitalized. And we don’t want to stymie American exports to our trading partners around the world.”
Over the next few years, millions of barrels of crude produced in the Permian Basin in West Texas and New Mexico will pour into Corpus Christi.
United States S. oil refineries have pretty much absorbed as much of the new volumes of shale oil they can, the vast majority of the extra crude pumped from American oil fields will have to be shipped to Europe and Asia, where China’s demand is growing rapidly.
The International Energy Agency believes the nation’s oil export capacity will more than double to 4.9 million barrels a day by 2023, and Corpus Christi would become the nation’s top export hub. The port, one of the closest to both the Permian Basin and the Eagle Ford Shale in South Texas, could outgrow Houston in a couple of years.
Dredging the Corpus Christi ship channel, officials said, would clear the way for some $36 billion a year in exports to flow through the region.
Last week, as heavy snows blanketed Washington, D.C., and lawmakers rushed to pass the 2,232-page omnibus spending bill, Strawbridge and an entourage of port officials met with U.S. Sens. Ted Cruz and John Cornyn, Rep. Kevin McCarthy and others, pleading for Congress to appropriate $60 million a year through 2021 to complete the ship channel project.
Lawmakers had previously approved an annual $13 million for the project. With that budget, it would take more than a decade to finish dredging the ship channel. The federal share of the project comes in at $225 million of a total $327 million.
The Port of Corpus Christi Authority has had its $102 million portion in the bank for months and has already transferred $43 million to the Corps of Engineers, which has promised to hand out the first contract before July.
In the spending bill, Congress increased funding for U.S. navigation construction projects to $337 million, up $27 million from last year’s budget. But those funds will be split among five coastal ports and inland waterways.
“Not a lot to go around,” Strawbridge said. Corpus Christi officials said they’ve already seen materials costs rise amid rebuilding efforts in Houston.
The Port of Corpus Christi Authority in October paid the Army Corp of Engineers $43 million to launch the project this year, but dredging has yet to begin. Plus, he said, Corpus Christi is competing for funds with other ports represented by statewide port authorities, such as Georgia, Florida and Massachusetts. In Texas, local ports represent themselves because there is no one statewide port authority.
“Members of Congress are concerned if they’re supporting Corpus Christi, they’re subtracting from Houston,” he said.
Port officials have hatched a plan to raise funds to finance the project if Congress doesn’t come through. The port authority last week approved plans to solicit an underwriter to issue revenue bonds, commercial debt and acquire a $100 million loan to fund the ship channel expansion, as well as other projects to build docks, railroads and other infrastructure in the region.
In the next four to five months, Strawbridge said, the port authority plans to raise something between $200 million and $500 million, depending on how much money Congress appropriates for the project.