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Port of Corpus Christi to slash spending. Industry bankruptcies “going to happen”

PortandTerminal.com, March 14, 2020

Given the “sheer swiftness“ of the market meltdown, industry bankruptcies are “undoubtedly going to happen,” Sean Strawbridge, CEO, Port of Corpus Christi

CORPUS CHRISTI, TX – America’s biggest oil-export hub is going to slash spending and possibly defer more than one-third of its 2020 capital budget amid the worst price rout in nearly three decades.

This comes after a very promising start to 2020. In December when the Port announced its 2020 budget the expectation was that this year would be another record-breaking year for Corpus Christi.

READ: Port of Corpus Christi expects record-breaking revenue in 2020

The port, which recently surpassed Houston to become the country’s largest source of U.S. crude exports, was expecting increased revenues thanks to three new Permian Basin pipelines moving West Texas crude through the Port.

And then global oil prices cratered last week.

Crude exports from Corpus Christi already started to dip in February from record highs in January as impacts from the coronavirus took hold.

Much larger declines though are expected in the weeks and months ahead now that Saudi Arabia and Russia are preparing to flood the market in a price war that’s sent oil prices down into the $30/b area, Sean Strawbridge, CEO at the port said in an interview.

READ: Saudis Escalate Oil Price War With Huge Output Hike, Russia Follows

To get through this period the port is planning on major cost-cutting and investment deferrals

Sean Strawbridge, CEO at Port of Corpus Christi, posted this update to LinkedIn yesterday evening.

“Certainly you can expect there’s going to be a hit on exports,” said Sean Strawbridge, the port’s chief executive officer. “We have reviewed our capital plan and we’re going to make some adjustments and be disciplined about pulling back.”

Given the “sheer swiftness“ of the market meltdown, industry bankruptcies are “undoubtedly going to happen,” he said.

Early casualties of the crash could be two pipelines under development — Phillips 66’s Liberty and Red Oak projects— that are set to connect the Rocky Mountains and Cushing, Okla., to the port. “It wouldn’t surprise me if those lines were delayed,” Strawbridge said.

Phillips 66 said in a statement that timelines for the projects are unchanged.

The port was responsible for about 40% of total U.S. oil exports in January, or about 1.38 million barrels a day. The new pipelines were expected to further boost those volumes.

For now, Strawbridge has identified about $100 million of the port’s $275 million capital spending program that can be deferred to next year if needed, although no decisions have been made. He declined to specify what projects might be cut or delayed.

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