In Surfside Beach, Port Aransas, and elsewhere, contentious new infrastructure projects may be stalled by the accelerating pandemic.
Surfside Beach, a village of 560 people an hour south of Houston, is known for a few things: It has one of the state’s handful of drive-on beaches, attracting droves of families each summer to soak up the sun and the surf; its shoreline is the southern boundary of the Brazoria National Wildlife Refuge, where birders can catch a glimpse of the brilliant roseate spoonbill; and the beach is a favorite nesting spot of the Kemp’s ridley sea turtle, the smallest and rarest sea turtle on the planet. And now, much to the distress of the people who live here, Surfside Beach could soon be known as home to the last onshore leg of the newest crude oil pipeline in Texas.
Melinda Wilhelm, who operates an insurance agency in town, is especially concerned about the pipeline, a joint venture between Houston-based Enterprise Products Partners and Canadian petroleum giant Enbridge. The project proposes running it along the Highway 288 corridor, edging Angleton, Oyster Creek, and Surfside Beach, to an offshore oil platform 30 miles into the Gulf. Wilhelm’s 6-acre tract of beachfront property, which she describes as a “little slice of heaven,” sits squarely in the pipeline’s path.
Since learning of the project at a public meeting in February—Wilhelm wasn’t even notified by the companies, she says—she and community leaders have been working with environmental activists to slow it down. City councilors have voted to oppose it. While it’s easy to doubt this tiny town’s chances at winning a fight against two monied oil juggernauts, Wilhelm says the stakes are too high for residents to sit idly by. “Our concern is an oil spill could just devastate us,” she says. “Our livelihood is the tourist industry. … Nobody wants [the pipeline] here.”
Help may be on the way, albeit in a strange form: The rapidly intensifying COVID-19 pandemic, along with a flooded oil market, is disrupting the petroleum industry to a degree unseen in decades. With the industry reeling, Surfside Beach and other small communities fighting new oil and gas projects across the state are getting a leg up in these normally lopsided battles.
The Obama administration lifted a 40-year ban on crude oil exports from the United States in 2015, unleashing a flurry of industry activity. Dozens of pipeline projects have been proposed to ship crude from the Permian Basin of West Texas to the Gulf Coast, where the product can be loaded onto tankers and shipped overseas. In January, those pipelines pushed crude export volumes from Corpus Christi to “truly astonishing” volumes, one market analyst says. The Texas coast has been the site of its own frenzied industrial buildout in recent years, as petrochemical companies have raced to construct ethane crackers, chemical processing plants, and oil export terminals, reaping profits but also spewing pollutants and spurring worker deaths from fires and explosions.
But now, oil and gas economists told the Observer that the petroleum industry is in for an enormous slowdown. Revenues have been in freefall for years, despite a production boom in the Permian Basin that’s made Midland and Odessa some of the fastest-growing U.S. cities. An all-out price war between Saudi Arabia and Russia has flooded global markets with cheap oil, pushing crude prices to a dismal $20 a barrel. Stay-at-home orders in cities across the United States have decimated demand for gasoline. On top of all that, the country is poised for a recession, another stressor for the industry, says Clark Williams-Derry, an analyst at the Institute for Energy Economics and Financial Analysis. “The first response right now is save cash, cut your capital expenditures in the short term,” he says.
To weather the financial storm, many proposed oil and gas projects will be stalled or eliminated in the near future. Phillips 66, for example, is cutting $3 billion from its budget and postponing upgrades at a Houston-area refinery. Oil and gas producer Devon Energy said on Monday that it would slash its capital spending by $300 million. Altogether, oil and gas companies have cut $37 billion in capital expenditure spending for the year.
That’s good news for the tourist town of Port Aransas, near Corpus Christi, where city leaders and a nascent advocacy group are fighting plans to construct a new crude oil terminal on Harbor Island. The plan would include dredging the shipping channel to 75 feet, churning up sediment that could shade out seagrass and threaten the coastal inflows and outflows that sweep shrimp and fish larvae into estuaries. The Port of Corpus Christi, the government agency pursuing the plan, is also seeking to dump contaminated soil from the construction site in the surrounding area, prompting concerns from residents about releasing pollutants in the diverse but fragile ecosystem.
But the port is also facing a range of problems exacerbated by COVID-19 and the downturn in oil prices. In October, Carlyle Group, a major partner in the project, pulled out of the deal. Experts say it’ll be difficult to find another investor with such deep pockets that wants to bet on such a risky project. “If the virus problems go on long-term, you would think the financing issues that haven’t been worked out, some of those issues could come into play long-term,” says Rick Lowerre, an environmental attorney representing the Port Aransas Conservancy, which is opposed to the project.
State and federal permitting processes also complicate the plan since public meetings stand to be delayed. One permit sought by the port necessitates a “scoping” review, which normally requires a public meeting. Court hearings for legal actions filed by the city and the conservancy also may be postponed. A related hearing on a hotly contested plan by the port to build a desalination plant on Harbor Island was originally scheduled for March; it was postponed due to the virus.
In Surfside Beach, the pipeline plan shows signs of stalling. The comment period for a U.S. Maritime Administration permit sought by Enterprise and Enbridge has already been extended to April 23.
If the project isn’t scrapped, Wilhelm, the insurance agent, worries that Surfside Beach could soon be indistinguishable from other Gulf Coast communities dominated by the oil and gas industry. Less than a mile northwest of town sits the massive Dow Chemical Plant, a sprawling complex of tanks, railways, and smokestacks. In Quintana, just across the jetty from Surfside Beach, residents have watched Freeport LNG Development undertake a massive expansion of its liquified natural gas plant. “If you drove to any other coastal town, you’re gonna see plant after plant after plant, whether it’s plastics, oil, gas, whatever it is,” Wilhelm says.
Coastal communities now have a rare chance to battle back the oil and gas buildout. Wilhelm doesn’t plan to waste the opportunity. “We’re gonna fight it,” she says.
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