BROWNSVILLE, June 8 - Following on from last week’s successful forum on energy, U.S. Rep. Filemon Vela plans to hold a similar event that will focus on the importance of deepening the Brownsville Ship Channel.
Discussion on how the Port of Brownsville can capitalize on much-anticipated oil and gas production in the Burgos Basin in northern Mexico as well as increased offshore drilling in Mexican waters in the Gulf of Mexico came up at the energy event.
“There is so much discussion about the shale play. I happen to believe that what is happening in Eagle Ford - in areas above South Texas - is going to happen also in the Burgos Basin to the south. All of this is great for our region,” Eddie Campirano, port director and CEO of the Brownsville Navigation District, said at the energy forum.
“And, don’t forget about the offshore exploration and production. That is getting closer and closer to us. Look at the recent announcements in the western Gulf. We may be geographically positioned in the right place at the right time.”
According to a news report in the Washington Post on Sunday, Mexico has 26.6 billion barrels of untapped oil reserves in the deep waters of the Gulf of Mexico. The reserves are worth $11 trillion. According to Pemex, Mexico’s national oil company, there are an estimated three billion barrels of oil and 4.2 trillion cubic meters of natural gas in the Burgos Basin. Victor Herrera, managing director for Latin America at Standard & Poor’s, told the Washington Post that petroleum embedded in shale is the “low-hanging fruit” of Mexico’s energy overhaul. “We could see a lot of investment coming very quickly from Texas.”
Campirano said the Port of Brownsville is working with a “large group” right now that is focusing on supporting the inland shale play production. He said it was now time to start looking at the offshore oil sector. “There is a lot of activity going on in the region. It is being driven by what is going on in the energy sector but it is a lot more than just Eagle Ford Shale.”
Campirano also spoke about the possibility of the Port of Brownsville developing five terminals for importing, compressing and then exporting liquefied natural gas (LNG). He said that while many Texas ports want to land such facilities, Brownsville benefits from having a lot of spare land. “Nobody has land any more available on the Texas coast in a seaport environment that can accommodate a 500-acre development. That is why I believe there is so much interest here right now. Whether we will see five LNG projects at the Port of Brownsville over the next five to seven years remains to be seen,” Campirano said. “Really, all we need is one to see a multi-billion dollar investment.”
Campirano said the Brownsville Navigation District wants to deepen the Brownsville Ship Channel from the currently authorized 42 feet to 52 feet. He said this will position the port to take advantage of larger vessels carrying bigger container payloads, such as those coming from Asia via the widened Panama Canal.
“We have been working on the deepening of the Brownsville Ship Channel for quite some time. That process is quite cumbersome and bureaucratic. Ten years later and about ten million dollar later, this September we should be issuing a report on the feasibility of deepening the channel,” Campirano said.
“I look at not only the benefit it brings to our area but also the state and the nation. It is huge for us. The biggest benefit, in terms of revenue, in terms of employment, in terms of sustainability, is going to be supporting the offshore oil production that is going to occur.”
Campirano said Keppel AmFELS, which operates out of the Port of Brownsville, is the No. 1 producer in of offshore rigs in the United States. “It (deepening the port) is huge in terms of economic impact for the region. It isn’t about Brownsville. It is about South Texas. It will keep them (Keppel) from having to look to Singapore, Brazil or Europe for repairs and modifications. We really need to keep that business in our country.”
Congressman Vela’s energy forum was titled “Positioning Deep South Texas to Take Full Advantage of the Energy Revolution” and was held at La Plaza in downtown Brownsville. One of the main speakers was Congressman Gene Green, D-Houston, whose district includes the Port of Houston.
Green said the Port of Houston deepened its ship channel to 45 feet in the 1990s. He joked that was harder to get a permit to dredge than it is to get an LNG export permit. “Up until ‘95, Houston had been studied by the Corps of Engineers for 25 years to go to 45 foot. We finally got the authorization into law and over the years the money, a quarter of a billion of federal money and a quarter of a billion from local taxpayers. We relocated a lot of pipelines to go under the Channel,” Green said.
The plan at the Port of Houston now, Green said, is to deepen the Houston Ship Channel to 50 feet. “The battle we have had in the last few years has been the maintenance dredging. We have a lot of bayous and rivers coming into the Port of Houston. We can justify $50 million to $60 million a year for dredging needs but we can only get about $30 million. It is frustrating. The Corps (of Engineers) is underfunded.”
One possible source of revenue for deepening U.S. ports in the Gulf of Mexico is retooling the Harbor Maintenance Tax, Green said. “The Port of Houston generates about $125 million a year in maintenance fees for the federal government. We get back about $30 million or so. (Too much of) it goes into the general fund,” he said. The goal is to get the House Committee on Transportation to tweak the tax so that every penny raised through the Harbor Maintenance Tax is spent on dredging or port enhancement, Green said, just like all the money raised through the federal gas tax goes to transportation. “It (the money) is there. We are trying to change that. Just give us 50 percent of what we generate back to the Port of Houston. We could plan to get to the 50 foot we need to be competitive once the Panama Canal is widened. It is a long term battle,” Green said.
Brownsville’s Campirano was asked what 52 feet gets you that 42 feet doesn’t. “The vessels are getting bigger,” he responded, pointing out that while Houston is the largest container port on the Gulf Coast, Brownsville specializes in bulk commodities.
“We are one of the major steel importers in the country. If you have a vessel that is shipping 40,000 metric tons of slab that is coming from Russia and it is limited by a 42 foot draft, I can’t come in at 39 feet. If you are carrying 70,000 or 80,000 metric tons, I am going to need a draft of 46, 47, 48 feet. We cannot accommodate that growth,” Campirano said.
Campirano said he believes the Gulf of Mexico to be the largest production area for U.S. energy in terms of extracting oil.
“It is only going to get bigger. All of those rigs out there that have to come in for certification every five years, or come in for repairs. Deep water rigs are getting bigger. They are not the jack-ups anymore they are the semi-submersibles. They are bigger, they are wider; they are deeper. If you cannot get them into the channels in the Gulf of Mexico where they can be repaired, the time it takes to take those rigs to Singapore, Europe, to other countries, puts them out of production that much longer, plus it is exporting all those jobs.”
And so, in response to the question of why a 52-feet depth is needed in the Brownsville Ship Channel, Campirano said: “What it is does is it puts us in a position where we can support all that industry offshore. It puts us in a position to say to X,Y, Z company, you can bring your rig in and you can get it taken care of and you can get it back out to production in a much shorter time at much less cost.”
Congressman Vela told the Guardian at the end of the energy forum that he plans to hold a similar event that will focus on the need to deepen the Brownsville Ship Channel. “It is vitally important to this region,” Vela said of the Port of Brownsville.