Enterprise, Enbridge to develop U.S. Gulf Coast crude export terminal

Enterprise Products Partners LP and Enbridge Inc have agreed to jointly develop a U.S. Gulf Coast crude export terminal that would load supertankers off Freeport, Texas, Enbridge said.

The pipeline operators plan to finalize a deal that would provide Enbridge an option to purchase ownership interest in Enterprise’s Sea Port Oil Terminal (SPOT), subject to SPOT receiving a deepwater port license, Enbridge said.

Enterprise and Enbridge were previously rivals in a field of at least nine competing to build deepwater export projects to load U.S. shale oil onto Very Large Crude Carriers (VLCCs) that carry around 2 million barrels apiece.

Enterprise in late July announced it had signed long-term agreements with oil major Chevron Corp that advanced the project. It was the first company - and is still the only one - to make a final investment decision on a proposed U.S. deepwater port.

Enterprise expects to receive a deepwater port license in the second half of 2020, with construction taking about two years, spokesman Rick Rainey said.

In October, U.S. maritime officials resumed a licensing review of the proposed SPOT facility after a five-month pause to collect additional information.

Enbridge did not respond to requests for comment.

Rivals racing to develop similar projects include U.S. refiner Phillips 66, commodities trader Trafigura AG and privately held Sentinel Midstream LLC.

Carlyle Group said in October it had dropped out of a $1 billion crude export terminal near Corpus Christi, Texas.

The Enterprise-Enbridge partnership comes a few weeks after the companies announced an open season to solicit shipper commitments for a 200,000 barrel-per-day expansion on their jointly owned Seaway pipeline system, which carries crude from the main U.S. storage hub in Cushing, Oklahoma, to U.S. refiners.

A jointly developed deepwater facility would open a direct route for U.S. crude exports from Cushing for barrels produced in Canada and midwestern U.S. fields including in the Rockies and the Anadarko basin of Oklahoma, said Sandy Fielden, an analyst at Morningstar.

Enterprise “now has the momentum to get the first buoy done,” Fielden said.

Currently, only the Louisiana Offshore Oil Port (LOOP) can fully load VLCCs from the Gulf Coast.