EnergyTransportationPort of Corpus Christi Reaches Centennial As the Largest U.S. Port with Expansion, Diversification on the Horizon

The Port of Corpus Christi is in its centennial year. Since operation began in 1926, it has cemented itself as the chief mover of Texas crude oil and natural gas from the Permian Basin and Eagle Ford Shale outside the state.

From 2008 to 2020, the port’s export tonnage of petroleum and crude oil has grown 107 percent and 86 percent for commodities overall. In July, the port announced it set new quarterly and half-year tonnage records — which it’s set and broken frequently over the last few years.

Each year, the port oversees 3,800 ship movements and 19,000 barge movements in its channel.

With $645 million in renovations currently underway, the port’s economic output is primed to grow even further. Currently, the port’s channel is 47 feet deep; a plan for deepening and widening it is currently in Phase II of four to be completed next year. The dredging project will widen the port to 530 feet and increase the depth to 54 feet — allowing larger vessels and two-way ship traffic.

“Everyone sees the value in airports because they use them frequently, but they don’t necessarily see seaports the same way despite them holding tremendous importance,” Sean Strawbridge, CEO of the Port of Corpus Christi, told The Texan.

For the same reason that the price of gasoline is used by the public at large as a heuristic for the health of the energy industry rather than the price of diesel — which is more heavily used by goods-transporting semi-trucks — airports garner substantially more public attention, which is usually accompanied by funding.

Strawbridge said that when the state legislature reconvenes next year, the Texas Ports Association will request more than $1 billion for infrastructural improvements to the state’s 19 ports. Last month, Texas Comptroller Glenn Hegar projected a $27 billion treasury balance in 2023 along with a $13.6 billion projection for the state’s Rainy Day Fund.

According to Strawbridge, there’s been over $4 billion approved by Congress to fund navigable waterway projects, but it hasn’t yet been appropriated. The Texas Legislature, he hopes, can get the ball rolling on some of those in the state with its estimated tax windfall.

When it launched in 1926, the first business using the port was cotton producer Aransas Compress Company; a century later, it services far more, with a broader diversity of products.

And because of how lucrative the Port of Corpus Christi has been, their improvements are underway without much state subsidization. Strawbridge said the largest driver of its growth is petroleum; the port exports crude oil, liquefied natural gas, and refined products like diesel, jet fuel, and gasoline. It also ushers in renewable energy parts such as wind turbines along with breakbulk and dry bulk commodities.

The port has the largest military supply output in the country, a product of Hurricane Harvey hitting the Port of Beaumont and affecting its ability to provide that service.

Connecting these products to the port are three railways and multiple pipelines.

The Port of Corpus Christi is a political subdivision with actual taxing authority, something it’s used sparingly in the 100-year history such as for a Naval home port in the mid-1980s.

Its renaissance closely parallels the nation’s energy boom and fracking revolution, which exploded with the repeal of the crude oil export ban in 2015 — a sop thrown to congressional Republicans by the Obama administration in exchange for the extension of renewable energy subsidies.

“All politics is local, but business is global,” Strawbridge said, “and we’re a natural gateway and tributary to global markets.”

Though petroleum is its bread and butter, the port has expanded its portfolio of side projects. Earlier this month, the port announced a deal with Buckeye Partners for a land lease for a 45 megawatt (MW) capacity solar farm on 241 acres.

Jeff Pollack, chief strategy officer for the port, said the installation will be able to generate 88,000 MW annually. Pollack told The Texan that the project will add to grid resiliency and is “directly in line with our philosophy and ambitions for decarbonization.”

Additionally, the port is in the process of obtaining permitting approval to construct a 50-million-gallon per day desalination plant — a project that turns salt water into usable municipal water supply. That permit is awaiting approval from the Texas Commission on Environmental Quality,  described by Strawbridge as the largest regulatory hurdle to jump in the process, to be considered on September 7.

Once permitting is complete, he estimated it would take 30 to 36 months, but said that the permit might need to be upsized in the near future given the potential for water needs it could meet. Because of regulatory obstacles, the project is stretching into year four of the process, when the port estimated it’d only take between two and three years.

The port is also expanding its carbon capture and hydrogen-exporting capabilities, both part of its efforts toward “decarbonization.”

While the global supply chain has been stretched thin by the coronavirus pandemic and wild occurrences like the Suez Canal blockage, Strawbridge said Corpus has not faced as many difficulties as container shippers and ports.

One factor driving up some costs for the port, if marginally so, is the Jones Act, a 1920 law that requires freighters moving between U.S. ports to be built, owned, and operated by Americans. Meant to protect American jobs a century ago, the law has also increased shipping costs for anything moving from American port to American port.

The specifications limit the fleet available, which makes those ships which do qualify more expensive, a cost that is passed onto the consumer in the form of higher prices. According to Strawbridge, about one-quarter of movements within his port are “Jones Act movements.”

A substantial part of the cost increase is the dwindling status of America’s shipbuilding industry. Strawbridge believes in tweaking the Jones Act to allow certain foreign-built ships to qualify, limiting the expansion to allied countries.

“It’s a political third rail that nobody wants to touch,” he said.

Jones Act or not, the Port of Corpus Christi is poised to continue its success driven substantially by Texas’ prolific oil and gas production. Across the globe, natural gas, transported in liquefied form, is supplanting coal and biomass electricity generation due to its combination of energy efficiency and lower emissions.

Texas’ oil and gas industry has benefited from that trend, and the Port of Corpus Christi has facilitated that prosperity while experiencing some of its own.

“Ports are either a competitive advantage or a disadvantage for their states, and we want to ensure ours remain an advantage,” he concluded.