HARLINGEN, RGV – The possible emergence of Liquefied Natural Gas (LNG) terminals at the Port of Brownsville would not just big business; they would be game changers for the entire region, according to Port director Eduardo Campirano.
Speaking about Port of Brownsville activities a recent regional summit hosted by the North American Advanced Manufacturing Research and Education Initiative (NAAMREI) at Texas State Technical College in Harlingen, Campirano announced five proposed LNG projects.
“These LNG facilities are game changers. There are presently five proposed LNG projects at the Port of Brownsville. That does not mean we are going to see five. I am just saying there are five proposed. All of those are multi-billion investments,” Campirano said.
“Everybody hears about the very first one, the Cheniere facility in southeast Louisiana, an $18 billion investment. That is the kind of magnitude of project we are talking about. The first phase of one of these is in the billions of dollars range. We’ve got one that phase one will generate about eight billion of investment.”
Campirano said one LNG terminal would produce 3,000 construction jobs over a four year period. “They are not labor intensive once they are up and going but it will generate about 200 jobs that pay on average about $85,000 a year. A lot of us would line up for that regardless of what we are doing. You are talking about an order of magnitude for the region that is substantial. That is only one. Remember there is a potential for five.”
Liquefied natural gas (LNG) is a natural gas made up of mostly methane that has been converted to liquid form for ease of storage and transport. Because of its density, it’s especially cost-efficient to transport over long distances.
Of the five potential LNG facilities at the Port of Brownsville, all are in the very early stages of development.
“These are not the kind of projects that you announce and then start building it tomorrow. The regulatory price tag of going through the process is very, very, hefty. You will begin to separate the men from the boys, the serious projects this year. And, at least four of our five have indicated what they call the pre-filing process.”
Campirano said there are typically two kinds of permit that need to be acquired for an LNG terminal.
“The first is you need a permit to export to a non-trading country and you apply to the Department of Energy for that. But the real tale is going through the regulatory process and that is an application to the Federal Energy Regulatory Commission. I am told that this process alone will cost anywhere from $50 and $100 million. So, you can see that if somebody is going to make that call they are not just out there speculating. And, all of them have indicated… we will probably hear an announcement fairly shortly with the first one, on the prefer filing, followed by others between now and the second quarter next year. At that point it becomes a serious, serious, possibility for this kind of industry coming to the Valley.”
Addressing environmental concerns, Campirano said LNG is “one of the safest of the liquid commodities in the country,” and most heavily regulated from both a safety standpoint and an operational standpoint.
“I know there is a lot of concern about it but let me tell you about LNG. I am not an expert but I will tell you that there are facts on both sides of the table. This is one of the safest of the liquid commodities, gas commodities, petroleum commodities industries in the country. They are so heavily regulated both from a safety standpoint and a regulatory operational standpoint, whether it is the transport by vessel or the production on the ground, there has not been any kind of serious accident in the United States for over 40 years,” Campirano said.
“The standard in this country is not the standard in Africa and other parts of the world, where a lot of these problems occur. It is a very rigorous, a very transparent, a very open process, to go get one of these permits. So, at best, if they start this year it will probably take two years before they get all of the necessary clearances. At that point they have a serious decision to make. If they spent, let’s say, on the downside $50 million and they get their permits, they are probably going to go forward with the project. That is when you really begin to see the huge type of investment that this can make up.”
Campirano also gave an overview of oil and gas exploration in South Texas and how the Port of Brownsville is well-positioned to capitalize on it. “We are not in the middle of Eagle Ford but that does not mean we are not impacted by it. We are impacted by it,” Campirano said. “The reason I think Brownsville is positioned and the Valley is positioned, we are probably for the first time in the right location at the right time to take advantage of what is going on in the energy play.”
While there is a lot of discussion about the gas play, Campirano said it is worth keeping in mind offshore oil exploration as well.
“When you look up and down the Texas coast and you look for these kinds of facilities, large industry, you are talking about billions of dollars of private sector investment in any one of these facilities, the question is, where do you do it now? You cannot do it on the upper Texas coast because there is no room for a 500 acre facility on a deep water channel anymore. You can’t do it in Houston; you can’t do it in Galveston.
“You go down to Freeport, they are all used up. What has Eagle Ford done to Corpus? Guess what, they do not have any more land mass available. So, here we are sitting on a deep water sea channel, with access to the world, with 40,000 acres of land and plenty of acreage available on the water front. That is one of the reasons we are attracting a lot of that interest.”
PEMEX is the Port of Brownsville’s biggest customer, according to Campirano. In 2014, about 3.2 million metric tons of liquid commodities moved through the port; specifically diesel and gasoline. They import liquid commodities by rail, which are then loaded into vessels on the way to refineries on the upper Texas coast.
“We also export, meaning we bring in by vessel, a lot of gasoline and diesel that goes up by pipeline into Reynosa,” Campirano said. “In fact one of the environmental provisions of NAFTA was that in Mexico you have a 200 mile zone to the border that you needed to use low sulfur grade diesel as a way to reduce truck emissions. The majority of that diesel that comes into this region is used to support the frontera operation for commercial truck traffic.”
The Brownsville port is primarily petroleum based, but also handles massive quantities of gasoline, Campirano said. In 2014, more than 1.4 million metric tons of gasoline moved through the port, and aside from petroleum commodities, has the capability to move everything from vegetable oil to wax.
About 39 percent of the port’s commodity movement is in dry bulk, the majority of that is steel. In 2014 the port moved almost 2 million tons of slab steel, Campirano said.
“I only know of Houston and New Orleans that moved more steel than we did,” Campirano said. “All told, we have had a significant increase over 2013. This is symbolic of what’s going on at the port environment. We are all having good years, talking about how things are getting better, but the challenge is how to build the infrastructure necessary to keep up.”
Editor’s Note: Rio Grande Guardian reporter Steve Taylor contributed to this story from Brownsville.