Concerns mount over proposed deepwater Sea Port Oil Terminal project

Published on December 13, 2021 by Kim Riley

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With the most-recent comment period ending on Dec. 13 for the proposed deepwater Sea Port Oil Terminal (SPOT) off the Gulf Coast of Texas, numerous concerns highlight what some commenters say could prove to be project-ending challenges.

Numerous organizations, in fact, say the proposed Very Large Crude Carriers (VLCC) export fossil fuel terminal that’s slated to be built about 30 miles offshore from Freeport, Texas, undercuts the Biden administration’s commitment to tackling climate change and protecting public health, justice and the environment, and are not in the national interest.

Such groups — which include the Sierra Club, Earthworks, the Center for Biological Diversity, Oil Change International, Earthjustice, the Society of Native Nations, and the Texas Campaign for the Environment, among many others — have formally said that the Existing Deepwater Port Act, the National Environmental Policy Act, the Clean Water Act, and the Clean Air Act reviews all fail to adequately assess the extensive impacts of the project on climate, air and water quality, coastal and marine ecosystems and wildlife, frontline communities, public health, and environmental justice.

The nonprofit Earthworks, for instance, which works to protect communities and the environment from the adverse impacts of mineral and energy development, is among the many groups opposed to the development of the SPOT project, as well as seven additional proposed new or expanded crude export terminal projects in various stages of development along the Texas and Louisiana Gulf Coast, according to Earthworks Energy Campaigner Ethan Buckner.

“Our position is aligned with grassroots community groups most impacted by these projects’ development, that new oil export infrastructure would impose unacceptable levels of air pollution on already overburdened communities, and unnecessarily risk harm to endangered species and fishing communities along the Gulf Coast in the event of a spill,” Buckner told Daily Energy Insider. 

Earthworks is also concerned that increasing oil exports will facilitate more oil and gas drilling in the Permian Basin, causing additional health impacts in west Texas and exacerbating climate disruption, “adding further disproportionate risk to the health and safety of Gulf Coast communities,” said Buckner.

Specifically, the U.S. Maritime Administration (MARAD) and the U.S. Coast Guard (USCG) — which together are the lead federal agencies responsible for processing the application for the proposed SPOT project — in October made available for comment the Supplemental Draft Environmental Impact Statement (SDEIS) for the SPOT Terminal Services LLC Deepwater port license application. Comments were due by Dec. 13.

SPOT Terminal Services seeks a federal license to own, construct and operate the deepwater port for the liquefaction and export of domestically produced crude oil to the global market. The company plans to build a massive crude oil storage facility, offshore pipeline, and export terminal to load the VLCCs — a.k.a. humongous oil tankers.

According to the federal SDEIS, the proposed SPOT project would pump two million barrels of crude oil every day through 50 miles of new pipeline that will make its way to the new oil storage facility in Oyster Creek, Texas. From there, twin pipelines would cut through Surfside Beach, Texas, and into federal waters to a loading platform 30 miles off the Gulf Coast. 

As the first terminal of its kind in America, the infrastructure would serve to load the VLCCs, thereby moving more crude oil into the Gulf of Mexico annually than what’s currently produced on offshore drilling platforms off the Gulf Coast in an average year, according to commenters.

In total, the SPOT project would cross 129 water bodies en route to the Gulf Coast, impacting wetlands, waterways and the well water in the Surfside Beach community. If there was an oil spill across such a route, say commenters, fragile coastal ecosystems still recovering 10 years after the BP Deepwater Horizon disaster would be devastated.

Additionally, fishing and tourism industries — battered economically by the ongoing COVID-19 pandemic and severe weather brought on by climate change  — would be further harmed, they say.

“The project itself seems sound if the owners adequately address the environmental concerns that have been raised,” said Ed Hirs, Energy Fellow in the University of Houston Economics Department. 

The remoteness of the terminal from shore means that spill reporting and cleanups will rely most heavily on the parties who do not have an incentive to report spills, Hirs said, noting that the VLCCs will be foreign-flagged and less subject to U.S. regulatory oversight.

And that brings up another red flag: national security.

“From a national security perspective, these oil exports are a bad idea. Prior to the removal of the oil export ban, the U.S. domestic refiners would have had an economic incentive to reconfigure their refineries to process this crude,” explained Hirs. “But with several of the crude producers in the Permian partnering with Chinese companies, the direct export of the light crude creates a national security concern.”

Hirs did point out that SPOT is expected to cut the cost of exporting U.S. crude oil by providing a shorter pathway to market for oil produced in the Permian Basin, in turn helping the producers receive better prices as they export the oil to other nations.

At the same time, however, if the U.S. begins to restrict the sale of crude to other countries, the project may find itself stranded, Hirs warned.   

“This could happen with an outbreak of war between Russia and Ukraine… [which] would eliminate Russian oil exports to the U.S.,” said Hirs. “Or, if there is a military conflict in the South China Sea due to rising tensions between China and almost everyone who trades there. The U.S. would cut off oil exports to China in order to reduce China’s ability to prosecute a war.” 

Butch Cooper, an experienced marine surveyor, said that the idea of offshore deepwater ports is a positive step both for the U.S. economy and relieving port congestion in the gulf coast ports. “There is a need for them as the U.S. exports crude oil,” Cooper told Daily Energy Insider.

But he has safety concerns.

“Exporting by VLCC is the clear choice for exporting U.S. crude oil, given the distance the tankers travel for delivery of the crude,” said Cooper, who explained that loading the mammoth VLCCs at Deepwater Ports keeps them in deep water away from coastal shipping traffic and limited draft ports where the risk of an incident — such as a grounding, like the Exxon Valdez — would be high.

The safety issue Cooper is concerned about is the distance between the platform and the single point mooring (SPM) — the mooring point for the vessels in the SPOT project.

“The distance is only .65 nautical miles,” he said. “A fully loaded VLCC can carry as much as 2 million barrels of oil and due to its size and weight needs adequate space to safely maneuver. SPOT’s proposed distance is not adequate in an offshore location where high wind and waves frequently occur.”

For example, if a vessel broke away from the SPOT SPM, there would be too little time to react and the vessel could strike the platform, said Cooper, injuring people, destroying the platform, and leading to a huge oil spill. “MARAD and USCG do not seem to recognize how serious this potential issue is.”

In filed comments with the federal entities, Cooper said their response to him was that the platform-to-SPM-distance issue is operational and handled at a later stage of the permit. 

“But the danger of a platform strike with such a short distance is clearly an environmental risk and should be evaluated at this stage,” he said. “The fact that MARAD and USCG did not even consider this significant environmental risk is unacceptable.”

Cooper said he is not against the SPOT project and thinks such proposed projects are important because they will play a fundamental role to help America achieve its climate goals. “I just want to make sure that these facilities are properly vetted from a safety and environmental standpoint.”

Despite the protests and concerns, project owners are confident the SPOT project will receive regulatory approval in spring 2022.