Why Build Corpus Christi ship channel project
- Project Cost: $327 million project Includes
- USACE share – $225 million
- Port Corpus Christi share – $102 million
- Project Benefits Include:
- Add an est. $35 billion annually in exports
- Provide over $100 million in annual transportation cost savings
Port of Corpus Christi By Numbers
- $150 BILLION of economic activity including:
- $20 billion in economic activity for Texas
- $4.7 billion in personal income
- $353 million in state and local taxes
- 80,000 port related jobs
- 4th largest US sea port by tonnage: 100 million tons per year
- Largest US-produced crude export port: 200 million barrels est. in 2018
- $50 BILLION in privately funded industrial projects underway
- Expected to become largest exporter of Liquefied Natural Gas in the US by 2020
Earlier this week, Sean Strawbridge traveled from Corpus Christi, TX, to Washington, D.C. to meet with folks on the Hill before President Trump announced his Fiscal 2019 budget on Monday.
Strawbridge had a simple wish list.
The CEO of the Port of Corpus Christi wanted the port’s channel deepening project to be included in the President’s Fiscal 2019 budget. He met with the White House’s Office of Management and Budget and the US Army Corps of Engineers, impressed on them the need to fund the project, and how that would unleash US crude oil and LNG exports, helping the nation gain energy independence and also closing its ballooning trade deficit.
And then, he got his wish.
“We are very excited that President Trump in his Fiscal 2019 budget included the Port of Corpus Christi project,” Strawbridge told Icons of Infrastructure on Tuesday.
“We have been working on this for 27 years, having first started in 1990, and to reach this point today when we are included in the President’s budget is a momentous milestone.”
The port of Corpus Christi has become a major gateway for global energy trade since Congress lifted the ban on the export of crude oil in December 2015. The announcement of new pipelines from Permian Basin will only augment its position. The port likely will export 200 million barrels of US crude oil in 2018. Coupled with shipments of LPGs (5.6 million barrels) and petroleum products (101 million barrels), it is the nation’s largest port for crude exports.
Click here for slideshow
Underscoring the port’s strategic importance to energy exporters, the CEOs of 6 energy companies wrote a letter of support to President Trump a day before his State Of The Union address – urging him to release federal funds for the project. The CEOs were from:
- NuStar Energy
- Occidental Petroleum
- Howard Energy Partners
- Cheniere Energy
- BuckEye Partners
- Plains All American Pipeline
These companies, like many others, depend on the port for their business expansion. For example, Cheniere Energy is working to open a terminal at the port to support deals with China. The company has begun construction on two liquefaction plants to convert the gas into liquid, and it’s planning to build a third if it secures enough sale contracts. All told, the port has attracted $50 billion in private, industrial projects including foreign direct investment in the region.
In the letter, the CEOs wrote “We are collectively writing to express our unequivocal support for Port of Corpus Christi Ship Channel Improvement Project (CIP) and ask that you include $60 million for this project in your Fiscal Year 2019 Presidential Budget to begin Federal participation in its construction.”
Notwithstanding their request, the budget recommends only $13 million toward the construction of the project, which includes deepening the channel at the port to facilitate the passage of large cargo vessels. While the federal money would be chump change considering the total project cost is $327 million, Strawbridge said its inclusion in the budget sends the right signal to the market.
“The letter of support was delivered to President Trump the day before his State of the Union address,” Strawbridge said. “He clearly listened and mentioned it in his address. And that he included it in his fiscal 2019 budget speaks volume about the importance and viability of this project, and its positive impact on the economy.”
Construction of the project has been authorized by Congress on two separate occasions, based on the project’s viability. In fact, a cost-benefit analysis by the Army Corps of Engineers done before Congress lifted the crude export ban and exports skyrocketed concluded the project has national benefits of $2.65 cents for every $1 dollar invested at the 7% discount rate. At current levels of export, the benefits will be much higher.
Still, the project has been plagued with funding issues.
Of the $327 million cost, the Port of Corpus Christi has committed to funding $102 million, with the remaining $225 million coming from federal resources. However, given the Trump Administration’s push to involve private capital in infrastructure projects, Strawbridge said he’d like to explore private funding options – although there are challenges.
“Private capital has expressed an interest to bring funding to the project, but first we need to find a repayment process,” Strawbridge said. “There is no way to toll a federal channel. Unless there is another path for repayment, it will be hard to attract private capital.”