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| Texas Oil Port Hit by One-Two Punch: Falling Demand and Overproduction | Texas Oil Port Hit by One-Two Punch: Falling Demand and Overproduction |
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| CORPUS CHRISTI, Texas — Ever since this Gulf Coast city’s leaders helped persuade the Obama administration and Congress to lift the export ban on liquid fossil fuels in 2015, the Port of Corpus Christi has been a steady tide of construction, creating nearly 10,000 permanent jobs and bringing in $54 billion in capital investment. | CORPUS CHRISTI, Texas — Ever since this Gulf Coast city’s leaders helped persuade the Obama administration and Congress to lift the export ban on liquid fossil fuels in 2015, the Port of Corpus Christi has been a steady tide of construction, creating nearly 10,000 permanent jobs and bringing in $54 billion in capital investment. |
| But the coronavirus pandemic, which has slammed the brakes on economic activity across the nation, threatens to halt investment in planned projects and abandon thousands more new jobs. | But the coronavirus pandemic, which has slammed the brakes on economic activity across the nation, threatens to halt investment in planned projects and abandon thousands more new jobs. |
| The expansion of the port in the years leading up to the crisis produced new pipelines and distribution facilities, export terminals, liquefied natural gas plants, storage depots and refineries. Corpus Christi has turned into the largest energy exporter and third-largest port in the United States by tonnage. Last year, it handled 122.2 million metric tons of cargo, 60 percent of it exported oil. | The expansion of the port in the years leading up to the crisis produced new pipelines and distribution facilities, export terminals, liquefied natural gas plants, storage depots and refineries. Corpus Christi has turned into the largest energy exporter and third-largest port in the United States by tonnage. Last year, it handled 122.2 million metric tons of cargo, 60 percent of it exported oil. |
| But April turned out to be a cruel month for the port’s fossil fuel-based business strategy. After the virus outbreak forced Americans into a lockdown, demand for fuel plummeted 40 percent, while prodigious production from Texas oil fields added to a global surplus. Oil prices, hit by the double whammy of falling demand and overproduction, have plunged nearly 80 percent since the start of year. | But April turned out to be a cruel month for the port’s fossil fuel-based business strategy. After the virus outbreak forced Americans into a lockdown, demand for fuel plummeted 40 percent, while prodigious production from Texas oil fields added to a global surplus. Oil prices, hit by the double whammy of falling demand and overproduction, have plunged nearly 80 percent since the start of year. |
| Natural gas prices, under $2 per thousand cubic feet for months, are at their lowest level since before World War II. Global demand for natural gas has been steady: Corpus Christi still ships more than 25,000 tons of it a day. But the flow of oil through the port has started to slow. | Natural gas prices, under $2 per thousand cubic feet for months, are at their lowest level since before World War II. Global demand for natural gas has been steady: Corpus Christi still ships more than 25,000 tons of it a day. But the flow of oil through the port has started to slow. |
| From his home office, Sean Strawbridge, the port’s chief executive, surveyed the severe market disruption and reached two conclusions. | From his home office, Sean Strawbridge, the port’s chief executive, surveyed the severe market disruption and reached two conclusions. |
| First, he said, construction projects that were underway would continue. Two of them make up almost half of the capital investment of the last four years. | First, he said, construction projects that were underway would continue. Two of them make up almost half of the capital investment of the last four years. |
| Cheniere Energy, a Houston-based company, is constructing a third production line to liquefy and export natural gas from its LNG processing plant that opened two years ago and has cost $16 billion, according to Industrial Info Resources, a consulting firm that tracks plant construction around the world. And Exxon and Sabic, its Saudi Arabian partner, started construction last year on a 1,100-acre site east of the port’s ship channel for a $10 billion chemical plant to turn natural gas liquids into polyethylene, a feedstock for plastics manufacturing. | Cheniere Energy, a Houston-based company, is constructing a third production line to liquefy and export natural gas from its LNG processing plant that opened two years ago and has cost $16 billion, according to Industrial Info Resources, a consulting firm that tracks plant construction around the world. And Exxon and Sabic, its Saudi Arabian partner, started construction last year on a 1,100-acre site east of the port’s ship channel for a $10 billion chemical plant to turn natural gas liquids into polyethylene, a feedstock for plastics manufacturing. |
| Second, said Mr. Strawbridge, Texas drilling rigs are shutting down, oil and gas production is diving, and industrial developers are nervous. “It’s a different time,” he said. “We fully anticipate a production slowdown. We’ve employed significant austerity measures.” | Second, said Mr. Strawbridge, Texas drilling rigs are shutting down, oil and gas production is diving, and industrial developers are nervous. “It’s a different time,” he said. “We fully anticipate a production slowdown. We’ve employed significant austerity measures.” |
| Relieving some of the pressure, the Organization of the Petroleum Exporting Countries and other oil-producing nations agreed to slash oil production in May and June, a move that is expected to add stability to the market. | Relieving some of the pressure, the Organization of the Petroleum Exporting Countries and other oil-producing nations agreed to slash oil production in May and June, a move that is expected to add stability to the market. |
| “It certainly brings more discipline to the producers, including U.S. shale producers which will organically cut three to four million barrels per day in U.S. production,” Mr. Strawbridge said. “That will have a dampening effect in our export volumes for some period of time.” | “It certainly brings more discipline to the producers, including U.S. shale producers which will organically cut three to four million barrels per day in U.S. production,” Mr. Strawbridge said. “That will have a dampening effect in our export volumes for some period of time.” |
| Mr. Strawbridge and his colleagues were enthusiastic about the $2.5 billion, 650-mile Red Oak pipeline, announced last year by Phillips 66 and Plains All American Pipeline, to transport 400,000 barrels of oil from Oklahoma to Corpus Christi. But Phillips suspended the project in March. | Mr. Strawbridge and his colleagues were enthusiastic about the $2.5 billion, 650-mile Red Oak pipeline, announced last year by Phillips 66 and Plains All American Pipeline, to transport 400,000 barrels of oil from Oklahoma to Corpus Christi. But Phillips suspended the project in March. |
| The Red Oak project, the fifth and latest pipeline to transport oil from production fields in Texas and the West, was meant to help the port triple its oil export capacity to more than five million barrels a day by the mid 2020s. | The Red Oak project, the fifth and latest pipeline to transport oil from production fields in Texas and the West, was meant to help the port triple its oil export capacity to more than five million barrels a day by the mid 2020s. |
| A year ago, the demand for oil export capacity in Corpus Christi was predicted to climb to 2.5 million barrels a day by mid-2021 and account for 56 percent of all U.S. petroleum exports, according to Wood Mackenzie, a research and consulting firm. But in April, oil exports from Corpus Christi started marching in the opposite direction, falling to 1.3 million barrels daily from 1.8 million in January. | A year ago, the demand for oil export capacity in Corpus Christi was predicted to climb to 2.5 million barrels a day by mid-2021 and account for 56 percent of all U.S. petroleum exports, according to Wood Mackenzie, a research and consulting firm. But in April, oil exports from Corpus Christi started marching in the opposite direction, falling to 1.3 million barrels daily from 1.8 million in January. |
| Along the port’s ship channel, delays, suspensions and project cancellations are apparent. A plan to build a new oil export terminal on 55 acres in the port collapsed. Two years ago, the port signed a lease agreement with Pin Oak Terminals, a private company, to build the facility. The company terminated its lease in March. | Along the port’s ship channel, delays, suspensions and project cancellations are apparent. A plan to build a new oil export terminal on 55 acres in the port collapsed. Two years ago, the port signed a lease agreement with Pin Oak Terminals, a private company, to build the facility. The company terminated its lease in March. |
| Permico Energia, a Houston-based company, announced in 2018 its plan to build a $700 million LNG production plant on 160 acres near the port. The company has apparently abandoned the proposal, Mr. Strawbridge said. | Permico Energia, a Houston-based company, announced in 2018 its plan to build a $700 million LNG production plant on 160 acres near the port. The company has apparently abandoned the proposal, Mr. Strawbridge said. |
| Permico executives did not immediately return requests for comment. | Permico executives did not immediately return requests for comment. |
| The Corpus Christi port itself, midway through a 10-year, $1 billion capital investment program, decided to suspend construction of a $40 million dock and deferred another $84 million in construction projects to 2021. But a $25 million, 65,000 square-foot administration building is on track to be finished in September. | The Corpus Christi port itself, midway through a 10-year, $1 billion capital investment program, decided to suspend construction of a $40 million dock and deferred another $84 million in construction projects to 2021. But a $25 million, 65,000 square-foot administration building is on track to be finished in September. |
| Across Texas, experts differ on the long-term consequences of the pandemic and low fossil-fuel prices. Mr. Strawbridge said that unsold oil is now being stored in 15 tanker ships anchored in the Gulf of Mexico. | Across Texas, experts differ on the long-term consequences of the pandemic and low fossil-fuel prices. Mr. Strawbridge said that unsold oil is now being stored in 15 tanker ships anchored in the Gulf of Mexico. |
| Oil fields, refineries, pipelines and export infrastructure have sustained an economic body blow, said Rusty Braziel, the chief executive of RBN Energy, a Houston consultancy that analyzes energy markets. He added that his firm did not see a recovery in growth for another five years. | Oil fields, refineries, pipelines and export infrastructure have sustained an economic body blow, said Rusty Braziel, the chief executive of RBN Energy, a Houston consultancy that analyzes energy markets. He added that his firm did not see a recovery in growth for another five years. |
| “The whole picture has changed,” he said. “Every company we deal with has already made decisions to dial things back. Not temporarily. Permanently.” | “The whole picture has changed,” he said. “Every company we deal with has already made decisions to dial things back. Not temporarily. Permanently.” |
| But others expect a shorter period of disruption followed by a rebound to normal national and global demand for oil. | But others expect a shorter period of disruption followed by a rebound to normal national and global demand for oil. |
| Industrial companies in energy and other sectors have announced plans for $200 billion in capital investment along the Houston Ship Channel over the next three years, said Vincent J. DiCosimo, director of the Greater Houston Port Bureau, a trade association, who is active in the Houston Port Authority’s plan to deepen and widen the channel. | Industrial companies in energy and other sectors have announced plans for $200 billion in capital investment along the Houston Ship Channel over the next three years, said Vincent J. DiCosimo, director of the Greater Houston Port Bureau, a trade association, who is active in the Houston Port Authority’s plan to deepen and widen the channel. |
| Energy companies engaged in construction projects in Houston, as well as those in various stages of permitting, have not announced any changes in their plans or construction schedules. | Energy companies engaged in construction projects in Houston, as well as those in various stages of permitting, have not announced any changes in their plans or construction schedules. |
| Updated June 12, 2020 | |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. | Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| “This is a blip, not a longtime paradigm shift,” Mr. DiCosimo said. | “This is a blip, not a longtime paradigm shift,” Mr. DiCosimo said. |
| There is evidence that other companies feel the same way and are moving forward with their plans in Corpus Christi. | There is evidence that other companies feel the same way and are moving forward with their plans in Corpus Christi. |
| Buckeye Partners joined Marathon Petroleum and Phillips 66 in constructing a $500 million depot to store up to seven million barrels of oil. The depot, which includes two deepwater docks, is close to opening. | Buckeye Partners joined Marathon Petroleum and Phillips 66 in constructing a $500 million depot to store up to seven million barrels of oil. The depot, which includes two deepwater docks, is close to opening. |
| Steel Dynamics, an Indiana company, has started construction on transport facilities for a $1.9 billion plant at a 2,500-acre site in Sinton, a town north of Corpus Christi. The plant is scheduled to open next year. | Steel Dynamics, an Indiana company, has started construction on transport facilities for a $1.9 billion plant at a 2,500-acre site in Sinton, a town north of Corpus Christi. The plant is scheduled to open next year. |
| The new plants, Mr. Strawbridge said, join other big port projects under construction and are seen by port executives as reassuring signals that the development momentum will not be lost in the pandemonium caused by collapsing energy prices and the pandemic. | The new plants, Mr. Strawbridge said, join other big port projects under construction and are seen by port executives as reassuring signals that the development momentum will not be lost in the pandemonium caused by collapsing energy prices and the pandemic. |
| The Army Corps of Engineers, for example, is partnering with the port on a project to widen and deepen the Corpus Christi Ship Channel that is scheduled to be completed in 2022. The port is paying one-third of the $500 million cost, Mr. Strawbridge said. | The Army Corps of Engineers, for example, is partnering with the port on a project to widen and deepen the Corpus Christi Ship Channel that is scheduled to be completed in 2022. The port is paying one-third of the $500 million cost, Mr. Strawbridge said. |
| The Texas Department of Transportation is building a $1 billion cable stay bridge across the ship channel to replace the 61-year-old Harbor Bridge. | The Texas Department of Transportation is building a $1 billion cable stay bridge across the ship channel to replace the 61-year-old Harbor Bridge. |
| The port also is working with Phillips 66 and Trafigura, a Swiss company, to build a $200 million underwater pipeline to the proposed Bluewater Texas Terminal oil export buoy 15 miles offshore in the Gulf of Mexico. Phillips 66 applied 11 months ago to the U.S. Maritime Administration for a permit to build the terminal, which is designed to handle 1.9 million barrels a day. It is one of four offshore Gulf terminals under consideration by the Maritime Administration. | The port also is working with Phillips 66 and Trafigura, a Swiss company, to build a $200 million underwater pipeline to the proposed Bluewater Texas Terminal oil export buoy 15 miles offshore in the Gulf of Mexico. Phillips 66 applied 11 months ago to the U.S. Maritime Administration for a permit to build the terminal, which is designed to handle 1.9 million barrels a day. It is one of four offshore Gulf terminals under consideration by the Maritime Administration. |
| But some experts question whether that project will move forward. | But some experts question whether that project will move forward. |
| “It’s not going to look anything like it has in the past five years,” said Mr. Braziel of RBN Energy. “We’re in a different world.” | “It’s not going to look anything like it has in the past five years,” said Mr. Braziel of RBN Energy. “We’re in a different world.” |