PROFILE MAX MIDSTREAM
BUILDING FOR THE FUTURE Max Midstream CEO Todd Edwards tells Tank Storage Magazine about plans to turn the Port of Calhoun into a rival for Houston and Corpus Christi, and the sustainable focus THE TEXAN ports of Corpus Christi and Houston are hugely important for the export of many US products, but they are increasingly congested. Both are in built-up areas, so expanding to deal with the shipping traffic is difficult at best and impossible in most cases. In 2015, the US Army Corps of Engineers and the Calhoun Port Authority realised that the port at Point Comfort needed to be expanded. In 2020, the plans were authorised by Congress and signed into law. By deepening the Matagorda Ship Channel at Point Comfort, more products can be imported and exported, including concrete, fertiliser, chemicals, bauxite (the world’s main source of aluminium) and oil and gas, among other products. This will in turn lead to economic growth throughout the region and more jobs for local Texans. The only problem was how to pay for such an expansion. That’s where Max Midstream entered the scene. The Houston-based energy company agreed to pay for the construction of the widening and deepening of the channel and thus speed up the process. Why would a US midstream company pay for a general port expansion? Tank Storage Magazine spoke to Max Midstream president Todd Edwards to find out about the company’s plans for oil at the port, which form part of the wider export plans. ‘The Port of Calhoun is located halfway between Houston and Corpus Christi,’ says Edwards. ‘So, when the Army Corps approached the Calhoun Port Authority with a plan to expand this port so that all
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products can be shipped from there, we offered to pay for it.’ The Port of Calhoun has been in operation for around 50 years, but after a major operator pulled out, it has only been running at 30% capacity, so there is no congestion. As well as close proximity to various oil pipelines, the Port of Calhoun has other advantages over its more established neighbours. It is located in a rural area, giving lots of space for expansion, and is closer to deepwater. Edwards linked up with a London-based investor, Azad Cola, who agreed with Edwards’ analysis of the situation and came onboard. Max Midstream and Cola purchased the Seahawk pipeline and terminal in the port from Northstar Midstream, owned by Oaktree Capital, and from there secured an option on all of the land around the port. In December 2020 the US Congress passed the Army Corps’ plan to widen and deepen the port. Within 18 months, Edwards says, the port capacity will be the same as Corpus Christi and Houston and will allow Max
‘The market is going to dictate the direction and we’re going to be prepared for ESG when it becomes mandated, whether that’s in two years, or 20 years’
Midstream to export additional product, as it will be able to serve Aframax and Suezmax ships directly. The wider, deeper channels will of course also benefit the bulk carriers expected to be attracted to the port, which will be able to bring in much bigger freighters. Max Midstream has recently engaged Citibank as its advisor. ‘Citibank is probably the largest advisor in the world when it comes to this kind of work. Ports don’t just come along and to be able to take an existing port and transform it to an export terminal is exciting to everybody,’ says Edwards. EXISTING FACILITIES AND EXPANSION Currently, the Seahawk terminal has 600,000 bbl of storage and four 12” loading arms. Max Midstream is currently building an additional dock specifically for barges, and plans to expand the storage capacity by 2 million bbl. In addition to the Seahawk terminal, Max Midstream owns a 1.5 million bbl terminal in Edna, Texas, which connects directly to the Permian Basin and Eagle Ford oil fields, and is also connected directly to Port of Calhoun by 12” pipeline. This terminal will also be expanded by around 2 million bbl and Edwards says the designs are complete for the new tanks and additional lines to the port. ‘We have a partnership with Cola and we have a design that we’re going to implement that will allow us to secure
