Oil is big in Texas and it, and natural gas, are about to get bigger, particularly in the Corpus Christi area thanks to the Eagle Ford Shale, possibly the largest on-shore oil reserve ever discovered in the United States. It ranks as the largest oil and gas development in the world based on capital invested.
From record drilling levels to wells producing over 4,000 barrels of oil per day, the Eagle Ford Shale is redefining South Texas as an oil industry hotbed. It is also expected to double the region’s economy in nine years and quadruple it in the next 18 years.
Eagle Ford Shale deposits of both oil and natural gas have generated $61 billion in economic impact on the South Texas economy in 2012, more than doubling its impact from 2011.
In the past few years, Eagle Ford Shale has attracted a wave of new businesses, jobs, international investment and wealth to the Corpus Christi region. This investment directly impacts the break bulk business at the Port of Corpus Christi, which is already ranked as the fifth largest port in the United States in total tonnage.
A subsidiary of Switzerland-based Trafigura AG is spending $500 million to build crude-oil and natural-gas storage tanks and docks at the Port of Corpus Christi. The company estimates that they’ll be able to receive 100,000 barrels per day of crude and condensate from Eagle Ford Shale.
Cheniere Energy is developing a $10 billion liquefied natural gas (LNG) export terminal, one of the largest investments for the region. The company decided to move forward on the 664-acre project given interest from customers in similar projects and its proximity to the Eagle Ford Shale.
Austrian steel company, Voestalpine, plans to build a $700 million plant on land belonging to the Port of Corpus Christi’s La Quinta Trade Gateway to import iron ore from Brazil, Canada and Minnesota to make hot briquette iron (HBI) that will be shipped to European auto plants. Voestalpine targets its high quality HBI product toward high end customers such as Audi, Porsche, Mercedes and Lamborghini.
“We will also produce head plates for oil rig and deep sea fabrication of pipelines,” comments Matthias Pasti, Voestalpine spokesman.
Once operational in early 2016, the factory will use natural gas from Eagle Ford to power the plant.
“Our long term strategy is to increase our non-European business from 24 percent to 40 percent,” he reveals.
Voestalpine sees the United States as a core market for its steel products. “And it will become more so in the future,” says Pasti.
While the United States already represents a $1.1 billion turnover for the Linz, Austria-headquartered company, Voestalpine executives expect that turnover to increase to $4 billion by 2020.
Voestalpine expects to produce 2 million tons of HBI per year in the new Corpus Christi plant. “Approximately half will be shipped back to Austria and the rest will be sold to customers in the United States, Mexico, and South America,” he reports. “In fact, we have sold a considerable amount of tonnage before we have even broken ground on the new factory.”
The company already produces an annual throughput of 5 million tons per year.
In shipping product between the Texas site, other North American locations and Europe, Pasti explains that Voestalpine will employ what it calls an economic and logistically sustainable “round trip shipping concept.”
“Instead of ships calling at the Port of Corpus Christi empty, we will employ a ship loaded with iron ore pellets in Canada to sail to Corpus Christi where the pellets will be discharged,” Pasti explains. “There the ship will be loaded with HBI pellets and sail to Rotterdam where they will be discharged.” The ship will then sail to Norway where it will load pellets again and return to Corpus Christi.
“We will minimize empty ship routes, create more efficiencies and less emissions at less cost,” he adds.
For the voyage, Voestalpine will utilize purpose-built ships under long term contract.
Tianjin Pipe Co. (TPCO) of China is breaking ground on a $1.5 billion facility in Corpus Christi for the manufacturing of seamless pipe for the oil and gas industry. The selected site is across US 181 from Port Corpus Christi’s La Quinta Trade Gateway. The facility will be the largest new manufacturing investment that a Chinese company has ever made in the United States.
The new plant, which is sometimes called the Texas or Gregory Minimill Project, will produce 500,000 metric tons per year of 4-inch through 10 ¾-inch of seamless steel pipe. This pipe, which is utilized by the oil and gas industry, is produced by recycling scrap steel in combination with pig iron. Johnston expects the company will utilize some 600,000 to 700,000 tons of scrap steel in manufacturing the pipe.
As the U.S. domestic market expands production, particularly of shale oil and gas, the domestic demand for pipe is likely to increase. “This increased demand offers additional market opportunities for TPCO America products,” says J.J. Johnston, director of administration for TPCO America.
TPCO America also envisions the possibility of exporting their products to other emerging energy markets such as West Africa or locations in South America.
“The Port of Corpus Christi offers many advantages,” says Johnston.
For one, the port is served by three Class I railroads (BNSF, Kansas City Southern and Union Pacific), has excellent road connections with direct access to Interstate 37 and US Highway 181, and is served by a wide range of ships and barges. On its southside, Dock 8 offers the strongest open wharf on the Gulf of Mexico with 23 acres of directly adjacent open storage. Docks 14 and 15 provide multi-purpose facilities with 173,000 square feet of covered dockside storage. The northside offers more than 120 acres of open storage area for marshalling, storage and fabrication. A seven-acre, surfaced pad is located adjacent to Docks 9, 10 and the ro/ro ramp.
TPCO is already the world’s third-largest producer of steel pipe, manufacturing 2.9 million tons (2.6 million metric tons) in 2008. The company currently exports 20 percent of that output to over 90 nations. Although a great deal of TPCO’s emphasis is on the oil and gas industry, TPCO’s products were also used in the construction of the Bird’s Nest, the Water Cube and other venues of the 2008 Beijing Olympic Games. Known internationally for the quality of its products, TPCO designs and manufactures according to recognized industry standards and specifications.
The company is expanding its global manufacturing footprint in other markets as well, including Dubai and Indonesia. Until the last few years, though, TPCO kept its manufacturing in China, where it’s a major force. Formed by the Chinese government in 1993, the company now has a 50 percent share of the Chinese market for seamless pipe.