Corpus gears up for Eagle Ford gas

Fuel Fix ^ | January 17, 2013 | Jennifer Hiller

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CORPUS CHRISTI — It sits outside the frenzied drilling activity, but Corpus Christi has its eye on the gas fields of the Eagle Ford Shale region.

Even as companies chase crude oil deposits in South Texas, Corpus Christi is betting on dry natural gas — currently uneconomic to drill — as a long-term fuel supply for its busses and city fleet, and as an export product for its port.

“What’s happening in the Eagle Ford is not staying in the Eagle Ford,” said Richard Borchard, a Port of Corpus Christi commissioner, who spoke at an Eagle Ford Shale Consortium meeting Wednesday on the campus of Texas A&M University Corpus Christi. “It is coming here to our region.”

Bill English, vice president of business development at Cheniere Energy, said the company hopes to have its federal permits in place by August, allowing it to start construction next year on an $11 billion export terminal for liquefied natural gas at the Port of Corpus Christi.

Although some chemical and manufacturing companies have started lobbying against LNG exports, fearing that U.S. prices will rise as a result, English noted that natural gas fields largely aren’t being drilled now by oil and gas companies. There’s not enough of a domestic market for natural gas, he said.

“If you don’t have a market for this gas, it’s going to shut in and the bloom is going to come off of that rose,” English said. “If you can’t sell it, you can’t develop it.”

Corpus Christi also sees natural gas as cheap fuel.

“We’ve got all this gas,” said John Alexander with the city of Corpus Christi. “Why don’t we use it in our area?”

Corpus Christi first did a pilot project with natural gas vehicles in 1982 — an ill-fated experiment that Alexander said resulted in acceleration problems and cars stalling in the middle of police chases.

But by 2000, technology had improved, and Alexander said the city again dipped its toes into compressed natural gas vehicles, slowly switching some of its fleet and adding compressed natural gas stations. A gallon of compressed natural gas costs the city about 60 cents per gallon (an individual that had to pay taxes on the gas would pay about $1.02 per gallon), and it now has 75 city CNG vehicles, including five dump trucks and 10 garbage trucks.

The Corpus Christi Regional Transportation Authority also is switching its 81-bus fleet to CNG. The CNG buses cost $60,000 more than a diesel bus, buses for the disabled cost $25,000 more and support vehicles cost about $10,000 more.

But John Valls of the CCRTA said that the additional cost of the vehicles and the fueling stations is offset by the fuel savings. “We’re cutting our fuel costs by two-thirds,” he said.

Corpus Christi also is building up its infrastructure to handle the influx of crude oil into its port, which used to be a crude importer, but is transforming into an exporter thanks to the Eagle Ford Shale activity. Now companies are using the port to ship crude to refineries in Louisiana and other states.

“On a strategic basis, the best thing we can do is put in infrastructure,” said Sandy Sanders, deputy port director with the Port of Corpus Christi. “Infrastructure, infrastructure, infrastructure.”

Port and former Naval Station Ingleside projects related to Eagle Ford activity include $25 million in tank farms and pipelines by Martin Midstream Partners, NuStar Energy LP’s $7 million investment in tanks to help move crude oil and Flint Hills Resources’ more than $30 million in dock upgrades and pipelines, Sanders said.

“Guys, we’re sitting on a roman candle,” he said.

About 150 people attended Wednesday’s meeting. The Consortium will meet next March 7-8 in San Antonio for its annual conference, which will include a keynote from Clarence Cazalot Jr., CEO of Marathon Oil.

Registration for that event is free. For information, visit eaglefordconsortium.org.

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geez, 11 bilion here, 15 million there, 7 million some where else, sounds like it may soon be a lot of money - LOL.