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Lone Star Secures Lease for Deepwater Oil Export Terminal in South Texas

A proposed deepwater oil export project in South Texas that would move Lower 48 volumes to overseas markets on Thursday clinched a 50-year lease agreement for a terminal near Corpus Christi.

The Port of Corpus Christi Commission approved the lease agreement with Lone Star Ports LLC, a joint venture between The Carlyle Group and the Berry Group, for 200 acres on Harbor Island to develop the state-of-the-art petroleum export terminal.

Lone Star’s facility if it is sanctioned would be the deepest-draft safe harbor crude export facility in the nation when it is commissioned. The project is one of two now proposed for the Corpus area, and among eight deepwater ports planned along the Gulf Coast.

“This long-term commitment is testament to the significance of the Corpus Christi gateway for American energy exports, which are expected to triple in the next decade,” said Port CEO Sean Strawbridge. “A 50-year lease agreement with the Carlyle Group and the Berry not only complementary to our existing marine terminal infrastructure but also positions the Port of Corpus Christi to be the preferred outlet for U.S.-produced crude exports serving all major global demand centers for generations to come.”

South Texas has become a destination for myriad oil pipeline projects underway to transport crude and natural gas from Lower 48 developments, particularly from the Permian Basin. Expanding the Corpus port is considered key.

The proposed facility’s two docks would have access to an improved 56-foot ship channel depth, making it the first and only U.S. onshore terminal capable of fully loading Suezmax vessels and nearly full loading very large crude carriers (VLCC). The export hub in Ingleside, in the northeast corner of the Corpus port, able to partially load a VLCC, but the only existing VLCC-capable terminal in the United States today is offshore Louisiana in Port Fourchon, the Louisiana Offshore Oil Port, or LOOP.

“The Carlyle Group is enthusiastic about our shared vision with the Port of Corpus Christi Commission to develop an environmentally safe, world-class facility that will position Corpus Christi as a vital economic engine in Texas and around the globe,” said Carlyle managing director Ferris Hussein. “This partnership is a great vote of confidence in Carlyle and our abilities to deliver generation changing infrastructure projects, and we take that responsibility seriously.”

The project if it moves forward is likely to create more high-wage jobs and economic prosperity for Nueces County and the surrounding region. However, city leaders from Port Aransas, where Harbor Island is located, protested the lease during the contentious hearing on Thursday, noting that the tourist town relies on trade that would be impacted if there are accidents similar to the recent incident at the Intercontinental Terminals Co. LLC petrochemical complex in La Porte near Houston. A massive fire led to a shelter-in-place order for a few days.

The U.S. Army Corps of Engineers earlier this year awarded the first dredging contract for the Corpus Christi Ship Channel Improvement Project to Great Lakes Dredge and Dock Co., to deepen the channel to a depth of 56 feet from the channel entrance to Harbor Island, and a planned depth of 54 feet throughout the rest of the harbor.

Civil works for the facility repurposing project have been underway for the past year ahead of finalizing the definitive lease agreement, including demolishing existing dock structures from a previous decades-old crude import terminal on Harbor Island.

Port Corpus Christi today is the fourth largest in the United States in total tonnage. Carlyle has pledged $400 million to continue to dredge the ship channel to a 75-foot depth to allow VLCCs, which carry up to 2 million bbl of crude, to dock at the terminal. That portion of the project still faces an extended environmental review.

Executing the new lease enables the parties to begin major equipment and materials procurements, as well as begin other construction efforts.

“This project on Harbor Island is the next pivotal step in directing the growing crude oil production in the United States to global markets via our Port of Corpus Christi,” said Port Chairman Charles W. Zahn Jr.

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