Louisiana oil port in great shape despite recession
June 1, 2009
Nearly three decades after the nation''s first offshore oil port opened 18 miles off the coast of Louisiana in 1981, known as the Louisiana Offshore Oil Port, the port that once reportedly lost more than $40 million during its first full year of operation is now awash in profits. Nearly three decades later, LOOP is lucrative. Demand for foreign oil has doubled since the 1980s, and the port receives about as much imported crude as it can handle. With $200 million in cash reserves at the beginning of 2008, according to Moody''s Investors Services, and dependence on foreign oil expected to hold steady for at least another decade, LOOP plans to keep raking in the dough. The port is finishing up a $180 million expansion that could bring even more crude through LOOP. Six 600,000-barrel storage tanks are already up and running, and another six should be built by the end of the year. Domestic production has created a second market. LOOP has pipelines tied into BP''s Thunder Horse field and Shell''s Mars field in the Gulf of Mexico. Before LOOP, supertankers had to unload onto smaller ships capable of taking crude to inland ports. Searching for a way to sidestep that process, which was time-consuming and often resulted in spills, LOOP''s developers hatched a plan for a port where supertankers could unload directly. Still, it took more than a decade of lobbying to convince state and federal regulators to back an offshore oil port. LOOP''s development coincided with revelations about Louisiana''s endangered marshland, which has been rapidly eroding for decades under the pressures of river levees and industrial development. LOOP ultimately tore up hundreds of acres of marsh in Lafourche Parish, making room for the complicated network of pumps and pipelines that carry oil from the offshore dock to refineries in Louisiana, Texas and the Midwest. Those facilities represent 50 percent of the nation''s refining capacity. The port cost $770 million to build, bringing a temporary influx of construction jobs to the state. The facility continues to employ about 160 people. On a given day, roughly 30 workers are stationed offshore, where they work in shifts tending to daily operations. A 48-inch pipeline pumps the oil to a booster station located at Port Fourchon, which then shoots the fuel into caverns carved out of a natural underwater salt dome in Clovelly, near Galliano. From the salt caverns, or from LOOP''s aboveground storage tanks, the oil moves in measured batches to refineries. About 1 million barrels of foreign crude moves each day through LOOP, or roughly 10 percent of all petroleum imported into the United States. LOOP will provide easy access to oil for the $3.4 billion Garyville refinery, which by year''s end should be converted from the nation''s 18th-biggest refinery to the country''s fourth largest. Gulf of Mexico production may well be LOOP''s next big market. Although domestic oil consumption is not expected to decline by 2030, foreign imports should fall somewhat as production in the Gulf unearths more domestic oil, according to the federal Energy Information Administration. LOOP saw shipments slide by roughly 10 percent this year, after demand for oil retracted under the weight of the recession.