From The Houston Chronicle

With a massive shift in the marine fuel market just months away from implementation, a Galveston fuel storage operator says it plans to operate a 50,000 barrel a day crude processing facility to meet new stricter environmental regulations set to take affect in January.

Texas International Terminals confirmed Wednesday reports from Reuters that it plans to launch a crude processing facility to produce low sulfur fuels compliant with the so-called IMO 2020 marine fuel rules.

IMO 2020 is considered one of the biggest disrupting forces to hit the refining and shipping fuel markets in years. The new international marine laws will require ships to use cleaner fuels with sulfur content of just 0.5 percent, down from the 3.5 percent sulfur content allowed today.

Texas International Terminals will operate a crude distillation unit in Galveston that will be supplied with bunker fuel and marine gas oil from affiliate GCC Bunkers.

GCC Bunkers said in an Aug. 27 release that its fuel will be compliant with the new IMO 2020 standards and transported from Houston in dedicated barges so as to ensure there is no sulfur contamination.

Texas International Terminals operates a dry and liquid bulk transportation terminal on the Galveston Ship Channel capable of serving rail, deep draft vessel, barge and trucks. The terminal has 325,000 barrels a day of total storage capacity and permits for construction of another 1.6 million barrels a day of additional capacity, according to its website. The company told Reuters it has bunker storage capacity of 50,000 barrels at the plant site, and plans to add 750,000 barrels of fuel oil storage and 500,000 barrels of gas oil storage at the site.



The new project would compete with other refinery operators, such as BP, Chevron and Exxon Mobil.

For months, Royal Dutch Shell, Exxon Mobil and others have been developing new, cleaner fuels to meet the new standards and satisfy the shipping industry’s need to replace up to 3 million barrels per a day of marine fuel. The shipping industry may have to shell out an additional $60 billion a year on cleaner, costlier fuels, analysts say.

The rule change is expected to boost demand for lighter crude oils and diesel, prompting many refineries along the Gulf Coast to invest in upgrading their facilities to better process lighter crude.

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