$30 million crude oil terminal at Port of New Orleans to start receiving shipments next week

05 29, 2013 by The Times-Picayune

A new terminal that will receive shipments of crude oil by rail from Canadian and U.S. locations and send it by barge to refineries is slated to begin operating next week at the Port of New Orleans, a development that some say further cements Louisiana's position as a logistics hub amid the expansion of hydraulic fracturing, or fracking.

The Gulf Gateway Terminal, a joint project of Murex Ltd. and Bulk Resources Inc., is designed to transfer up to 10,000 barrels per hour of crude directly into barges or into a 103,000-barrel storage tank, officials say.

The terminal, at the intersection of the Intracoastal Waterway and the Industrial Canal, provides access to the Mississippi River and the Gulf of Mexico, with a capacity of one unit train per day.

"The bigger picture here is that Louisiana is shaping up as a place for doing logistics for the shale plays," said Chris Bonura, director of business planning and commercial development at the port.

By water, terminal operators can reach a dozen major refineries. By rail, via the New Orleans Public Belt Railroad, the terminal has access to six major railroads, which Murex president Robert Wright believes will set it apart from competitors.

"So much oil is being produced here, but obviously the production areas don't have the pipeline structure to take the oil away," Wright said. "Our plan is to bring unit trains of crude oil down to New Orleans and then to put them on the Mississippi River on barges to go out to the refining community."

Wright said the port's access to the major railroad lines is what sets it apart. "No one, to my knowledge, has access to six Class 1 railroads that feed the area, so we were lucky enough to work with the port and develop this project," he said.

Planning for the project started two years ago, he said. Pending the final permitting approvals, the terminal is slated to receive its first unit train June 5.

Wright said the terminal will add a 120,000-barrel tank later this year. "We'll be able to unload directly into the tank, freeing up the trains and unloading in a 24-hour period," he said.

Earlier this month, state officials announced a larger crude oil and blending operation, Wolverine Terminals, will be completed in St. James Parish by the middle of next year.

"If you look at where the demand structure is down there with the number of refineries that are within a very small area along the Mississippi River, our feeling is that the St. James area is only serviced by one railroad, and therefore it's not as attractive as an area as the Port of New Orleans," Wright said.

The $30 million St. James terminal is slated to generate 20 new direct jobs, Louisiana Economic Development said. The terminal will have a total capacity of 425,000 barrels of crude for storage, blending and domestic shipping.

Eric Smith, an associate director at the Tulane Energy Institute, which studies various aspects of the energy industry, said crude shipping terminals have emerged as an alternative amid the expansion of drilling of oil and gas in shale deposits and as TransCanada Corp.'s Keystone XL pipeline has stalled.

The $7 billion, 1,700-mile pipeline, which would carry about 800,000 barrels of heavy crude oil each day from Canada to Gulf Coast refineries, has drawn opposition from environmental groups, who have expressed concern about a possible spill.

In turn, Smith said the crude oil terminals, which cost about $30 million to build, are seen by many in the industry as a less expensive and less time-consuming alternative. "Pipelines are a more efficient way to move crude safer, but they're running into so many environmental hassles," he said.

Onshore oil production rose more than 2 million barrels per day, or 64 percent, in the United States from February 2010 to February 2013, according to estimates released this month by the U.S. Energy Information Administration.

Texas has more than doubled its production numbers in that span, while North Dakota's output has nearly tripled, according to federal estimates.

Initial development at the Gulf Gateway Terminal is pegged to be finished in November. After that, a second phase, involving upgrades so that it can handle heavy crude oil primarily from Canada will cost another $60 million, Wright said.

Overall, the project is expected to create up to 50 new, full-time jobs, ranging from management to accounting jobs to labor positions, such as unloading rail cars, Wright said.

He said port officials have been helpful throughout the process, and noted that the companies involved in the terminal have not received economic incentives from the state.

"There's a very limited amount of land for this activity, particularly at the Port of New Orleans, so we feel very fortunate," he said.