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“Texas Chicken” Concerns In The Houston Ship Channel

Thursday, 28 November 2019 | 00:00

The Port of Houston Authority’s commissioners voted to limit arrivals of container ships and shut down two-way traffic in the Houston Ship Channel. Gordon Feller investigates the impact.

The Port of Houston has recently come up against the challenges posed by a significant step up in container vessel size, as the vote undertaken by its commissioners shows.

Following this decision, a coalition of companies voiced concern that such interruptions could chill investment and export growth, but Houston Port Commission’s chairman, Ric Campo, said in a prepared statement that, “The Houston Ship Channel is open for business for all and will continue to be.”

Recently, the first container ship to exceed 1100 feet in length traversed the 23-mile stretch between the entrance to the ship channel and one of the port’s two container terminals, facing no oncoming traffic. This happened while outbound tankers were forced to wait until it docked.

That was the first of 10 such ships with length and/or width which were too large to safely allow two-way traffic, with more expected in coming months. Companies that work with tankers asked port officials to limit the transit of such ships to one per month, but they declined to avoid turning a ship away if more than one happened to arrive in the same week.

Port officials previously rejected a moratorium on bigger container ships to allow all ship channel operators to study the issue, given concerns about two-way traffic interruptions. However, a coalition of 13 companies that load and unload crude, refined products, liquefied petroleum gas and chemicals from tankers, as well as several oil and gas producers, formed a coalition to push for limits on the number of arrivals of the larger ships.

They contend such interruptions that can happen at any time could prompt companies to invest in liquids export infrastructure elsewhere and threaten the Houston port’s market share, just as Texas oil and gas production as well as chemical output is expected to grow sharply in the coming years.

The port also faces competition from other ports keen on gaining resin export business. The US Government’s data shows that there’s an expectation to increase export-bound polyethylene production by more than 13 million metric tonnes between 2017 and 2027.

Two key executives, Jim Teague, the CEO of Enterprise Products Partners, and Steve Kean, the CEO of Kinder Morgan, testified at a State of Texas committee in that state’s Senate.

They were seeking legislative intervention from new laws that would limit or block larger container ships from docking at the Houston port. They expressed concern that as the owner of the container terminals, the Houston port receives profits from the container business while regulating all other business on the 52-mile ship channel. Multiple bills are now pending in the Texas Legislature which address those issues.

At the same hearing, Campo said Houston port officials feared any restrictions on larger container ships would prompt ocean carriers to bypass Houston altogether and take container business to other ports.

However, the Houston Port Commission voted to limit arrivals of larger container ships that interrupt two-way traffic to one per week, “an interim solution intended to ensure unencumbered access to upper channel reaches,” the Houston Port Commission said in a prepared statement.

Both sides agree the ultimate solution is to widen the 530-foot-wide channel to 750-800 feet wide. However, such a project is years or decades away, and liquids operators turned to the state Legislature because until the Houston Port Commission’s vote, the port had rejected any such limits.

The US Federal Government’s Army Corps of Engineers is in the fourth year of a four-year, $10 million study examining the feasibility of deepening and widening the channel.

All ships normally flow freely toward each other in the ship channel, which is home to the world’s second-largest petrochemical port. In a carefully orchestrated manoeuvre – which some have dubbed “the Texas Chicken” – ships veer around each other to maintain consistent two-way traffic.

This is all happening in a waterway too narrow to allow such traffic, as is seen on a two-lane highway. However, ships that are 1100 or more feet long and 150 feet wide were deemed too large to safely accommodate the Texas Chicken – because they essentially become 54% wider when at an angle.

All other oncoming traffic waiting to exit the channel or waiting to get in must stand down, often for up to 10 hours or more, until the container ship docks or exits the waterway.

In 2018, 71% of 18,790 ships that traversed the channel involved energy – 55% were tankers, 10.5% involved natural gas and 5.6% were barges. Of the rest, only 11.1% were container ships, according to data from Houston Pilots.

The importance of the Port of Houston is undeniable. It is the largest port on the Gulf Coast and the biggest port in Texas and comprises a 25-mile-long complex of nearly 200 private and public industrial terminals along the 52-mile-long Houston Ship Channel.

The eight public terminals are owned, operated, managed or leased by the Port of Houston Authority and include the general cargo terminals at the Turning Basin, Care, Jacintoport, Woodhouse, and the Barbours Cut and Bayport container terminals.

Each year, more than 247 million tons of cargo move through the greater Port of Houston, carried by more than 8,200 vessels and 215,000 barges. The port is consistently ranked 1st in the United States in foreign waterborne tonnage; 1st in U.S. imports; 1st in U.S. export tonnage and 2nd in the U.S. in total tonnage. It is also the nation’s leading breakbulk port, handling 52 percent of project cargo at Gulf Coast ports.

The port has been instrumental in the city of Houston’s development as a centre of international trade. It is home to a multi-billion petrochemical complex, the largest in the nation and second largest in the world.

Carrier services on all major trade lanes link Houston to international markets around the globe. The ship channel also intersects a very busy barge traffic lane, the Gulf Intracoastal Waterway.

Centrally located on the Gulf Coast, Houston is a strategic gateway for cargo originating in or destined for the U.S. West and Midwest. Houston lies within close reach of one of the nation’s largest concentrations of 152 million consumers within 1,000 miles.

Ample truck, rail and air connections allow shippers to economically transport their goods between Port Houston and inland points.

The port is vital to the local, state and national economy and the maintenance and improvements of the public facilities ensures its continued economic impacts. Keeping the port secure so that business can flow freely is also an essential responsibility.

As the local sponsor of the Houston Ship Channel, the Port Authority plays an important role in the management and environmental stewardship of this important waterway.

Continued growth of both imports and exports and associated far reaching economic impacts can only be supported by infrastructure investment. Access to intermodal hubs, major traffic arteries and improvements to the Houston Ship Channel are critical for Port users.

The port is working with adjacent communities, local, state and federal agencies, and industry partners to ensure that road and waterway improvements keep pace with the constant increase in cargo.
Source: Platts

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