Though the Port of Corpus Christi (PCC), located on the Texas coast lying halfway between Houston and Mexico, has been striving to achieve diversification in the commodities shipped out of the port, it continues to remain, essentially, an energy port. The deep-water port, the fifth largest in the U.S., in tonnage terms, ironed out a strategic plan two years ago and, like most ports, has always tried to identify new business opportunities in its quest for diversification.
John P. LaRue, PCC’s executive director, explained in an interview with the AJOT at the U.S. State Department’s Foreign Press Center in New York, that like most ports, “we’re always looking for new business and new enterprises, so we were – the buzzword for ports is diversification - trying to find other industries, other things you can do”.
“For years we looked at doing containers and automobiles and other specialty products, but then we realized that we’re really an energy port. But Corpus Christi is still a major growing area for cotton, so we ship a lot of cotton to Europe, to Central and South America, and to Asia. So a lot of the cotton that goes over there comes back to the United States in the clothes we wear, but it starts in South Texas,” LaRue maintained.
Despite its heavy dependence on energy shipments, PCC does not rely only on oil. “We’re the largest wind energy import/export port in the United States. We do a lot of industry related to natural gas because we have a lot of natural gas … foreign direct investments are increasing dramatically by companies looking for a place where they have a steady, stable supply of natural gas,” he elaborated, adding that there were refineries that took crude and converted it into gasoline and diesel.
LaRue said that the port was allocating considerable capital resources for modernization and expansion of docks, rail and infrastructure.
“We have about $1 billion in a 10-year capital program, and that’s a lot for us. About eight years ago, our capital investment in a year was probably between 18 and 20 million (dollars), so you can see we’re ramping up quite a bit,” he said.
PCC moves a lot of liquid bulk and dry bulk. The port does not get any revenue from taxpayers in the region. “Our revenues come from our users. So we charge when people tie up at our docks, use our docks. They pay a fee for the ship and they pay a fee for the cargo that’s unloaded,” LaRue noted, pointing out that the port owns its own railroad system – almost 40 kilometers of rail - inside the port. The lifeline of a port is the ship channel which is, usually, not visible to people, though it constitutes what can be called an “underwater highway”.
“But it has to be maintained, and just as we have highways that have to be improved and restructured, it has to be deepened. So we’re going to deepen it, as part of the channel improvement project, from 45 to 52 feet, costing about $ 325 million. We pay half of that; the U.S. Government pays the other half,” he said.
Aside from the public investment, the port is also attracting private investments, drawing some important corporate players such as the Italian PET manufacturer M&G which supplies the raw material to bottle manufacturers. LaRue claimed the company is building the world’s largest PET/PTA plan on the port’s ship channel.
LaRue said that while PCC is not a container port, it is considering building a new multipurpose dock that would handle all kinds of products such as wind turbines, bulk materials, etc.
“We have a Chinese oil and gas pipe company that is building a plant to manufacture oil and gas pipes … the plant is a mile from this site, so they would be able to move their finished products, the oil and gas pipes and will sell in Central and South America, through this facility. So we’re doing the design on this dock right now. We hope to have it done within the next three to six months,” he explained.
Another company Cheniere, for example, is building liquefied natural gas (LNG) plant, the largest project in Texas. “And what they do is they build these huge freezers – that’s the only way to describe it – where they take natural gas and freeze it, liquefy it, and then ship it all over the world,” LaRue said.
The PCC’s executive director was also “excited” about the forthcoming opening of the expanded Panama Canal, which will allow the LNG to be shipped to Asia, with interest manifested in countries such as Korea, Japan, Taiwan, China, etc. The canal’s expansion is said to have cost about $ 6 billion.
Asian companies are also keen to develop infrastructure and other areas of interest at Corpus Christi; many Asians prefer “operating from within the U.S. market” rather than just exporting to it. Tianjin Pipe Corporation America is building a $ 1.3 billion seamless pipe mill. The pipes, utilized by the oil and gas industry, are produced by recycling scrap steel in combination with pig iron. “Occidental Petroleum is one of the major petroleum companies in the United States. They have a subsidiary that does chemicals – Oxy Chemical – and they have a longstanding plant in Corpus Christi that they’re now expanding … they’re building an ethylene cracker. That will open next year. The cost of that, again, is about a billion dollars,” LaRue said, pointing out that this company was partnering with a Mexican company called Mexichem.
The opening of the expanded Panama Canal designed to augment containerized movements, will facilitate and take about 85 percent of the capacity of the LNG fleet, up from the hitherto modest figure of only 15 to 20 percent of the capacity. This will make U.S. butane and propane exports, as also shipments of grain and dry bulk commodities, much more competitive to Asia than they are today.
The opening of the canal will also facilitate LNG tankers sailing from Texas to Asia this summer, according to LaRue.
The channel-widening plan is also being described as a safety measure, as vessel traffic climbs and the north shore of the bay attracts vendors hungry for liquefied natural gas and other chemicals.
“Five years ago, we were just a regional port and buying crude oil from Middle East, Nigeria, etc. and selling grains. Meanwhile, the USA is exporting its energy and gas, butane, propane, liquefied natural gas (LNG), crude and refined crude products,” La Rue said. The PCC handled some 103 million tons of cargo in 2015, up from 100 million tons in 2014. “However, tonnage was down in the first quarter of 2016 by 15 percent over the year-earlier period, and I am afraid it may not touch the 100 million ton mark this year. But 2017 is projected to be better,” La Rue said, adding that only about 15 to 20 percent of the liquefied natural gas fleet could pass through the old Panama Canal, though the new canal set to open by June end would absorb some 85 percent of the capacity. This is expected to make U.S. produced LNG and LPG exports to Asia’s lucrative markets much more competitive than they are today.