Energy companies fret Houston Ship Channel traffic
Energy companies are worried new, especially large container ships will cause traffic jams on the Houston Ship Channel and ultimately hinder the shale boom.
Enterprise Products, Targa Resources Corp., Kinder Morgan and others have formed the Coalition for a Fair and Open Port, which wants to cap the number of 1,100-foot-plus container ships that come to Houston.
Houston Pilots, tasked with guiding vessels in and out of the Houston Ship Channel, have enacted safety measures that only allow moving these vessels during the day. The ship channel’s typical two-way traffic is also reduced to just one-way traffic when moving the larger container ships.
So far, only four of these vessels have called on Houston, and one more is expected before 2019. But the coalition is concerned about impending traffic jams.
Since more port activity is related to industrial and energy products than containers, the coalition hired an outside firm to forecast how one-way traffic would affect the overall flow of ships.
The modeling is based on recent vessel activity, current pilot rules, weather, a projected growth of energy and industrial ships, and projected container ship growth as reported by the Army Corps of Engineers. It found that one-way traffic and the growing use of large container ships could suppress the energy sector’s ability to grow at a time when the U.S. is poised to become an exporting powerhouse.
“To put that channel on one-way traffic is going to choke off our ability to export what wants to be and needs to be exported,” said Jim Teague, CEO of Enterprise Products, who was speaking on behalf of the coalition rather than Enterprise.
Companies ramping up production need to export. But if they aren’t confident that their product can move through the Houston Ship Channel, they might pull less out of the ground. And that could affect jobs across the state.
The coalition submitted a resolution to the Board of Pilot Commissioners for the Ports of Harris County requesting that no more than one of these especially large container ships enter Houston each week. And that the ships be limited to one trip each day.
“We think the port commissioners need to show their customers, and they need to show them now, that they’re managing the port on an open and fair basis for all their constituents,” said John Rutherford, an energy-sector adviser and the executive director of the coalition. “Not just for the benefit of container shipping companies.”
Port Houston operates the ship channel’s two container terminals.
The coalition initially didn’t want any of these container ships to enter the Houston Ship Channel, but it revised this stance based on conversations in a working group created by Janiece Longoria, chair of the Pilot Board and the Port Commission of the Port of Houston Authority. The Houston Pilots and other industry stakeholders are part of the working group.
The resolution was not put on this week’s Pilot Board agenda to be discussed. Erik Eriksson, chief legal officer for Port Houston, acts on behalf of the Pilot Board as the working group’s convener. He said port officials are looking for a consensus from the entire working group, which has not yet been reached, rather than just the coalition.
He said delays from one-way traffic have so far been minimal, about half an hour.
“I think we will be able to reach a mutually acceptable way of handling all these vessels, maintain two-way traffic and continue to keep this growing as the busiest waterway in the country,” Eriksson said.
He said container ships aren’t the only vessels to get special measures from Houston Pilots. And this isn’t the first time a larger ship has shaken up Houston’s routine. In the past, pilots have put measures in place while they got more comfortable with the vessels. So Eriksson said when pilots have enough experience with the larger container ships, they could potentially take another look at the safety measures and ease them.
Rich Byrnes, chief port infrastructure officer for Port Houston, noted that one out of every three containers exported from Houston have some sort of plastic resins. So energy companies are benefitting from containers, too.
“The bottom line is that every individual company wants to optimize its own economics,” Byrnes said. “And so if they’re getting delayed by something, they’re going to point that out. But everybody is onboard with the bigger picture, which is that the ship channel needs to get widened ASAP.”
The coalition agrees with that last point, and its members are working with the port to speed up the widening process.
But a wider channel is years away. And in the meantime, the coalition wants to make sure all of the port’s stakeholders, including energy and container companies, can continue to grow at the channel’s current width.
“All agree that widening and deepening that channel is ultimately where Houston has to be to maintain its status as the premier port in the world,” said Vincent DiCosimo, a senior vice president for Targa Resources. “It is, today, the No. 1 energy exporting port in the world. It’s one of the top ports in the United States. Why? Because of industry and energy.”