Chapter 3

Flooding Global Markets

Gulf Coast communities have borne the brunt of the oil and gas industry’s pollution and safety violations for decades. The mounting severity of climate impacts in the region has additionally exposed the full weight of the industry’s destructive impact.

But as the Permian Basin fracking boom accelerated, the industry intensified the burden it places on long-suffering, low-income, Black, Brown and Indigenous populations, while also spreading to communities that had until recently been spared. The spread of pipelines, export terminals, tank farms and petrochemical facilities has been intense.

During this time, US crude exports went from 5% of US oil production before the ban was lifted (mostly to Canada, which was exempted), to 30% in 2020.

A study published in early 2020 showed that reinstating the oil export ban could lead to reductions in global carbon emissions by as much as 73 to 165 million metric tons of CO2-equivalent each year – comparable to closing 19 to 42 coal plants.

But while oil drives drilling and fracking in the Permian, the export boom is not confined to crude. As one LNG company executive put it in 2019, “(e)very incremental hydrocarbon produced [in the Permian Basin] from this day forward — whether it’s oil, liquids or gas, needs to be exported.” 

Fossil methane gas exports have also grown aggressively. Both by pipeline to Mexico, and via the liquefaction of gas (LNG) for export by ship to global markets, primarily Asia and Europe. The Gulf Coast is home to the vast majority of U.S. LNG export capacity, with four terminals already operating. In late 2021, two more terminals were under construction and up to 18 more have been proposed. 

Since the first US LNG terminal started exporting in early 2016, US exports of gas, which previously were mostly via pipeline to Canada and Mexico, have tripled. In 2020, the U.S. exported 16% of gas production. If the current crop of proposed LNG plants go ahead, this could grow substantially.

The proliferation of LNG terminals on the Gulf Coast poses an existential threat to communities faced with decades of living with the pollution and safety risks that these facilities bring. In addition, the export of fossil methane gas to global markets threatens to lock in emissions and build a wall against full decarbonization of the power sector in importing countries, due to the long-term contracts that the trade requires.  

Lifting the oil export ban was not enough on its own to trigger the twin booms of both production and exports in the Permian and Gulf Coast. A vast network of pipelines, processing plants, storage tank farms, and export terminals had to be built.

This infrastructure burdens communities with pollution and safety risks, and locks in a system of energy and chemical supply that the world can no longer sustain.

The build out of pipelines in the last five years has been particularly intense. Today, the focus is more on export facilities, particularly for crude oil and gas (LNG). If successful, the additional export capacity could lower the cost of and accelerate crude exports.

Increased LNG export capacity could lock in gas supply to countries that could be moving more quickly to renewable energy. All of this infrastructure threatens Gulf Coast communities with a toxic and hazardous future.

Since the crude oil export ban was lifted, Gulf Coast export terminal capacity has increased more than threefold. At over seven million bpd of capacity today, the existing Gulf Coast terminals are capable of exporting more than 60% of US oil production. However, only around 3 million bpd is exported on average today. Despite this surplus capacity, companies are pushing to build new terminals that can load bigger ships quicker, generating bigger profits for exporters, and incentivizing faster production growth in the Permian. 

Several permit applications are ongoing for the construction of facilities to load Very Large Crude Carriers (VLCCs). These massive tankers can hold two million barrels of oil and are in demand because such large volumes allow for lower per barrel shipping costs. Currently, no US oil export terminal can fully load a VLCC in-port, due to the draft, or water depth, needed to accommodate the huge ship when fully laden.

A handful of terminals can partially load VLCCs. But after a certain point, they have to finish loading by ferrying oil to the VLCC in deeper water using smaller ships. The additional time and cost of this means oil exporters are missing out on additional profit. In pursuit of that additional profit, several VLCC projects are in the permitting process amid concerted community opposition.

In the small town of Freeport, Texas (population 12,000), residents already struggle with high rates of asthma and respiratory health issues. The area is home to two existing petrochemical plants, a recently built LNG plant, and numerous pipelines running through the area. Now they’re facing proposals to build not one, but two VLCC terminals seven miles apart. The terminals would load VLCCs offshore but that involves pipelines and storage tanks onshore. Residents fear a 25% increase in already high volatile organic compound (VOCs) emissions if both terminals are built.

Sea Port Oil Terminal (SPOT)

• Communities Affected: Surfside Beach, Oyster Creek, Freeport, Brazoria County, Texas.

• Companies: Enbridge & Enterprise

• Status: Companies reached a final investment decision (FID) in July 2019, but the project had not been granted permits from United States Coast Guard (USCG) and Maritime Administration (MARAD) as of November 2021. 

• Details: SPOT would transport up to two million barrels of crude oil every day through 50 miles of new pipeline to a new oil storage facility in Oyster Creek, Texas. From there, twin pipelines would cut through the town of Surfside Beach and into the ocean to a loading platform 30 miles off the Gulf Coast. The offshore loading facilities are designed for VLCCs, enabling one VLCC (2 million barrels) to be loaded every 24 hours. The project would cross 129 water bodies en route to the coast, threatening wetlands, waterways, and the well water which the Surfside community relies on.

• Support communities resisting SPOT.

Texas GulfLink 

• Communities Affected: Jones Creek, Freeport, Brazoria County.

• Company: Sentinel Midstream

• Status: (Nov. 2021)  Pre-FID. Permitting still in process. 

• Details: Similar to SPOT, GulfLink aims to transport up to 2 million barrels per day of oil through a 42 inch pipeline to deep water offshore VLCC loading facilities designed to load a VLCC in 24 hours. 

  • Public Comment details including social media content in English and Spanish

LNG

Further development of LNG export capacity stalled at the beginning of the COVID crisis, as global demand for gas plummeted. In 2020, only one new LNG export facility, located in Mexico, reached a FID. This project will export gas from the Permian Basin via pipelines built over the past five years. The Annova LNG project, one of three projects proposed in Brownsville, Texas, was cancelled in March 2021. Several other proposed projects appear to be stalled.

Two projects are currently under construction, having made FID prior to the COVID crisis. The Calcasieu Pass project in Cameron Parish, Louisiana, which is scheduled to begin exporting LNG in early 2022. The other project is the Golden Pass project in Sabine Pass, Texas, which is scheduled to be completed in 2024.

Rio Grande LNG

• Communities Affected: Brownsville, Port Isabel, Cameron County, Texas.

• Company: NextDecade. 

• Status: (Nov. 2021)  Pre-FID

• Finance: Macquarie Capital and Société Générale were appointed as financial advisors in 2017. No firm information of financial backers has emerged as of November 2021. 

• Details: Rio Grande LNG is the largest of three LNG export terminals proposed in Brownsville, Texas, one of which, Annova LNG, was cancelled in early 2021. Rio Grande LNG is proposed as a 27 million ton per year export facility. The project threatens air and water quality in low income and marginalized communities. Indigenous communities in the area have challenged the project due to its impact on sites of archaeological and cultural significance. In late 2020, the French utility Engie pulled out of negotiations for a 20-year contract to buy LNG from the project, which many linked to the high environmental impact of Permian Basin gas. NextDecade is currently proposing to add carbon capture and storage (CCS) to the facility in a move to greenwash the project’s substantial climate impacts. CCS has never been applied to an LNG plant before and even if successful will not address the local environmental justice and wider climate impacts. Another project, Texas LNG, also faces opposition from the community.  More Details  Take Action

Plaquemines LNG

• Communities Affected: Ironton, Plaquemines Parish, Louisiana. 

• Company: Venture Global LNG

• Status: (Nov. 2021)  Pre-FID

• Finance: A US$500 million loan toward construction of the terminal was agreed with Bank of America, JPMorgan Chase, Mizuho and Morgan Stanley in February 2021.

• Details: Plaquemines LNG is a proposed 20 million tons per year LNG export facility located on the Mississippi River downstream from New Orleans. The project site was completely flooded during Hurricane Ida in late August 2021. A team from Healthy Gulf flew over the site 11 days after the hurricane and found the site remained submerged. The project would disturb 648 acres of land and 80 acres of water, and the related pipelines would disturb another 954 acres. The project would also result in the permanent loss of 368 acres of wetlands. Venture Global is also currently proposing to add carbon capture and storage (CCS) to the facility in a move to greenwash the project’s substantial climate impacts. CCS has never been applied to an LNG plant before and even if successful will not address the local environmental justice and wider climate impacts. More Details. Take Action. 

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