Max Midstream to Develop New US Crude Export Hub Following Acquisition from Oaktree

Max Midstream unveiled plans on Sept. 23 to develop a new export hub for U.S. crude oil on the Texas Gulf Coast following the acquisition of the Seahawk Pipeline and Terminal from Oaktree Capital Management LP.

The revitalized terminal located at the Port of Calhoun is not only expected to connect the Port to both the Eagle Ford and Permian basins, but also create more than 1,000 jobs in the Lone Star State, according to Todd Edwards, president of Houston-based Max Midstream.

“At a time when the oil and gas market is down, this project and partnership reflects proof that Texas is bouncing back and will remain resilient in being the world’s leader in oil production,” Edwards said in a statement on Sept. 23.

The project will create 474 direct new jobs and another 598 construction related jobs over the next 10 years, Edwards added citing a comprehensive economic impact study.

The new jobs will span across Texas, covering construction of the pipeline all throughout parts of the state. During the process, Max Midstream will be investing up to $1 billion into the overall project, according to the company release.

Currently, Max Midstream has agreements for three pipeline interconnects—the Kinder Morgan Crude and Condensate pipeline, the Gray Oak Pipeline, and the Victoria Express.

Max Midstream currently operates the Seahawk pipeline that connects the Kinder Morgan Crude and Condensate Interconnect in Edna, Texas, to its Seahawk terminal at the Port. Future expansion of a new pipeline is expected to connect the Gray Oak and Victoria Express pipelines to Max Midstream’s Edna terminal.

Ultimately, the company expects the Seahawk pipeline to transport up to 20 million barrels of crude oil a month from the Eagle Ford and Permian basins to the revitalized terminal at the Port of Calhoun. Exports will begin with completion of the first phase in late 2020. The second phase project is expected to be completed by 2023.

“By November of 2020 we will have 1.5 million barrels of storage built at Edna and 600,000 barrels of storage at the Port and the existing Seahawk pipeline, with the ability to export up to 4.2 million barrels a month,” Edwards said. “By the time the project is fully complete in 2023, we will have 9 million barrels of storage at Edna and 6 million barrels at the Port, with multiple pipelines to export crude through the Port.”

Additionally, Max Midstream said in the release it had reached an agreement with the Calhoun Port Authority on a public/private partnership, in which the company will invest $360 million to finance the deepening and widening of the Port by 2023.

Max Midstream will initially load Panamax ships and reverse lighter to larger ships in its lightering zone. Once the widening and deepening project is complete, Aframax and Suezmax ships will also be able to load at the Port, making it a viable option for any exporter seeking a port other than Houston or Corpus Christi, the company said.

“Today’s announcement is a groundbreaking moment in the history of the Texas oil industry,” Edwards added in the Sept. 23 statement. “It represents a new pipeline, a new port option for exporters and brings new jobs for Texans.”