U.S. and Japan Commit $2.1 Billion to Finance Texas GulfLink Deepwater Oil Export Terminal

U.S. 1 billion to Sentinel Midstream’s Texas GulfLink project, matching the terminal’s originally announced cost.

U.S. Petroleum exports climb to record highs amid the Iran war, with developers otherwise reluctant to commit capital without long-term contracts. A long line of VLCCs began trekking to the Texas Gulf Coast in April due to supply shortages from the Middle East. Each VLCC can hold 2 million barrels of oil but can only partially fill at Texas ports because of shallower depths.

They must be topped off in the Gulf of Mexico via smaller tankers, a slower, costlier and environmentally riskier process. ” Sentinel is a private Dallas company backed by Cresta Fund Management. Its chief executive, Jeff Ballard, stated that the deal is not a direct government acquisition.

Keland Rumsey, crude team lead analyst for East Daley Analytics, believes the Iran war is helping the joint governments expedite the Texas GulfLink project. The terminal will not be completed until late 2028. “I do think there’s going to be a shifting of how people view the Middle East as far as a reliable source of energy,” Rumsey said.

Construction on Texas GulfLink is expected to begin imminently. The terminal will be built about 30 miles offshore of the Texas coast. The hub will be moored in place and connected onshore via a long oil pipeline originating in tiny Jones Creek, Texas—nearly 60 miles south of Houston.

The effort to build a deepwater oil-exporting hub in the Gulf is a nearly decade-long effort. It was originally a race among top pipeline developers that stalled during the pandemic when demand plunged and the Port of Corpus Christi expanded its dominance. For years Sentinel’s project was viewed as an overlooked dark horse.

U.S. produces more than 13 million barrels of crude oil daily. It exports close to 4 million of those barrels per day. S. U.S. Strategic Petroleum Reserve. The only existing offshore exporting terminal is the Louisiana Offshore Oil Port (LOOP). LOOP is 45 years old, was built to import oil and converted to exports in 2018.

It has seen only minimal traffic because of its remote location and limited pipeline access, constraints Texas GulfLink will not face.

““They’ve been having the hardest time finding that commercial backing and justification to actually build the offshore oil port. So, the difference between those projects and the Sentinel project is having the Japanese funding backing it.””

“— Keland Rumsey, crude team lead analyst for East Daley Analytics Rumsey noted that producers remain wary of ramping up output too aggressively. “They don’t want to just drill, drill, drill if the [oil] price is going to crash after the war,” he said. “That’s the risk.””