The Port of Corpus Christi Authority said that it will work with The Carlyle Group to develop a crude oil export terminal on Harbor Island that would be capable of servicing fully laden very large crude carriers (VLCCs).

Under the terms of the agreement, Carlyle agreed to lead the construction and ongoing operations of the terminal on an exclusive basis. Carlyle also agreed that it would arrange for private funding for a dredging project to bring fully-laden VLCCs to Harbor Island (including at least a 75-foot main channel depth).

Source: Energy Information AdministrationAccording to the Energy Department, VLCCs are designed to carry around 2 million barrels of crude oil. Because of their large size, VLCCs require ports with waterways of sufficient width and depth for safe navigation. But all onshore U.S. ports in the Gulf Coast that trade petroleum are located in inland harbors. Although channels and rivers are regularly dredged to accommodate most ships, they are not deep enough for deep-draft vessels such as fully loaded VLCCs.

VLCCs transporting crude oil to or from the U.S. Gulf Coast typically use partial loadings and ship-to-ship transfers known as lighterings. Using this technique, a larger vessel partially unloads its cargo onto a smaller vessel. So-called reverse lightering occurs when smaller vessels load onto a larger vessel. These transfers take place in designated lightering zones and points that exist outside many of the largest U.S. petroleum ports.

If the VLCC terminal is built, the Port of Corpus Christi would receive regular rental payments, volume-based tariff income, land grants and other proceeds from the project. The terminal could become operational in late 2020. Carlyle’s equity for the investment would come from its Global Infrastructure Fund.

Source: Energy Information AdministrationThe project scope includes the development of at least two loading docks on Harbor Island as well as crude oil tank storage inland across Redfish Bay on land secured by Carlyle.

The Project is subject to agreement on definitive documentation between the parties, satisfactory completion of due diligence and final approval from Carlyle’s investment committee.

The Port of Corpus Christi ranks among the top five largest ports in the U.S. in total tonnage. It has a 36-mile, 47-foot-deep channel. The Carlyle Group is a global alternative asset manager with $210 billion of assets under management.