American midstream natural gas and crude oil pipeline company Enterprise Products Partners and Canadian energy transportation firm Enbridge Inc. have signed a letter of intent (LOI) to jointly develop a deepwater crude oil terminal in the Gulf of Mexico.
The duo will focus on commercial development efforts on Enterprise’s Sea Port Oil Terminal (SPOT) project, designed to be capable of fully loading very large crude carriers (VLCCs).
Under the terms of the LOI, the companies agreed to negotiate an equity participation right agreement whereby, subject to SPOT receiving a deepwater port license, an Enbridge affiliate could acquire an ownership interest in SPOT Terminal Services LLC, which owns SPOT.
The VLCC terminal project consists of onshore and offshore facilities, including a fixed platform located approximately 30 nautical miles off the Brazoria County, Texas coast in approximately 115 feet of water.
SPOT is designed to load VLCCs at rates of approximately 85,000 barrels per hour, or up to approximately 2 million barrels per day.
Construction of SPOT is subject to obtaining the required approvals and licenses from the federal Maritime Administration, which is currently reviewing the application for the terminal development.
“We are very pleased to work with Enbridge to jointly develop a deepwater port in the Gulf of Mexico to support growing exports of U.S. crude oil,” said A. J. “Jim” Teague, chief executive officer of Enterprise’s general partner.
The deal comes on the heels of Chevron’s decision to support the project. In July 2019, Chevron agreed to use Enterprise’s crude oil transportation, marine terminals, and storage facilities, which include its Houston storage facilities. The companies did not disclose whether Chevron would be taking any commercial stake in the SPOT project.