A plan to develop an 800,000 b/d crude oil corridor between the Texas Gulf Coast and U.S. Midcontinent regions is on track to begin service early in 1996.
In the latest action, state and federal authorities cleared the regulatory path for the proposed Seaway pipeline system. Meantime, work began on two construction projects key to the systems timely start-up.
ARCO Pipe Line Co. and units of Phillips Petroleum Co. are creating Seaway pipeline by pooling and reshaping selected assets (see map, OGJ, Feb. 20, p. 35).
Project sponsors say the crude oil capacity is needed because existing systems fall about 250,000 b/d short of meeting demand for transportation to serve inland oil markets.
In addition, demand for crude oil pipeline capacity appears sure to increase near term as oil shipments increase from so-called short haul suppliers in Latin America. In first half 1995, for the first time, U.S. refiners imported more oil from Mexico and South America than from the Middle East, North Sea, and Africa (OGJ, Aug. 21, p. 22).
Where it fits
ARCO Pipe Line Vice Pres. Karen Caldwell said Seaway should play a big role in future U.S. crude oil imports.
As we understand the production strategies and timing of producers in Mexico and South America, Seaway seems to be a good fit, Caldwell said.
Also, Seaway eventually could be linked to one or more proposed deepwater oil ports on the Texas Gulf Coast, depending on the timing of such projects.
Petroport or Safeharbor would be natural fits with our system, Caldwell said. In fact, I think our system gives additional impetus to those projects being developed.
Blue Dolphin Energy Co., Houston, has proposed building Petroport in 120 ft of water about 45 miles off Freeport.
Officials of the Port of Corpus Christi, Tex., are seeking to install Safeharbor in 100 ft of water about 20 miles off Mustang barrier island. The island guards the entrance to Corpus Christi Bay.
Seaway progress
To develop Seaway pipeline system, ARCO Pipe Line is contributing a 160,000 b/d crude oil pipeline system connecting a marine oil terminal at Texas City, Tex., with the major transportation and storage hub at Cushing, Okla. System components to be pooled into Seaway include:
- Tanker berths at Texas City capable of offloading as much as 1 million b/d of oil.
- 550 miles of 16 and 20 in. pipe.
- 2.5 million bbl of intermediate storage at two sites.
- A 550 mile, 30 in. pipeline linking Freeport, Tex., with Cushing.
- The 200,000 b/d, dual berth Freeport II Dock marine oil terminal.
- Four 400,000 bbl storage tanks at nearby Jones Creek, Tex., tank farm.
Phillips originally built what is now Seagas pipeline to transport as much as 600,000 b/d of oil from the Freeport area to inland refiners. However, lack of demand left the facilities idle, and Phillips in 1984 converted the system to gas service and changed its direction of flow to south from north.
Seaways capacity at start-up is to be 430,000 b/d, including 160,000 b/d on ARCOs Texas City-Cushing system and 270,000 b/d on the reactivated Seaway facilities. Partners could boost Seaway capacity to as much as 800,000 b/d capacity by adding pump horsepower.
ARCO in late September said state and federal regulatory agencies approved plans by units of Phillips to abandon gas transportation service on Seagas. The Federal Energy Regulatory Commission allowed Phillips Gas Pipeline Co. to abandon interstate gas service on the system, while the Texas Railroad Commission approved Seagas Pipeline Co.s request to end intrastate gas transportation.
Related construction
Meantime, ARCO said, WHC Inc., Lafayette, La., was mobilizing equipment to begin laying 7 miles of 42 in. pipeline to connect Seaway facilities at Freeport II Dock to Jones Creek tank farm. The project, to be complete by the end of November, is to increase capacity between marine terminal and storage facilities by at least 600,000 b/d.
In addition, Pine Bluff Sand & Gravel Co., Pine Bluff, Ark., is dredging tanker berths at Seaways Freeport dock to accommodate vessels 1,020 ft in length.
ARCO also reported Seaway sponsors are negotiating commercial agreements with potential shippers. Caldwell said the pipeline systems initial capacity likely will be fully used in the first year of operation.
ARCO Pipe Line and Phillips are mulling two more construction projects that would allow shippers more flexibility.
One possibility involves connecting Seaway with existing pipeline systems on the Texas Gulf Coast. That would allow shippers more options in deciding where to inject crude oil into Seaway.
Ultimately, if there were a big need to find alternate ways of moving crude along the Gulf Coast or back and forth to various refineries, there are ways we could connect up, Caldwell said. But nothing is included in the first stage based on that possibility.
In addition, ARCO and Phillips eventually could connect Seaways two main lines at a point where they cross near Teague, Tex., south of Dallas.
Because ARCO has substantial tank storage at Teague, connecting the ARCO and Seaway pipelines in the vicinity would make it a logical place to stage barrels from one line into the other.
Again, Seaway sponsors in the first stage of the project dont plan to make that connection. But if the market need is there, we can do that, Caldwell said. Its very low cost. Copyright 1995 Oil & Gas Journal. All Rights Reserved.
