Texas state bills opposed by Port Houston likely will become law

Author: Lane Kelley

2019/06/14

HOUSTON (ICIS)--State legislation opposed by Port Houston that would limit vessel size on the ship channel may become law soon unless Texas Governor Greg Abbott issues a veto.

The legislation stems from a conflict on the waterway between energy and container shippers. Abbott has until 16 June to veto the bills on his desk or they become law.

Oil shippers want to reduce the size and number of big container ships on the channel because such vessels cause one-way traffic and slow down transits which, according to industry logic, suppresses the oil and gas industry’s growth.

Container shippers say much vessel traffic on the ship channel goes two ways, though larger container ships – which can be 1,100 feet (340 metres) or longer – sometimes require that traffic only move one way at certain points.

Container ships in Houston move a lot of polymers such as polyethylene (PE), which is shipped in pellets. The buildup in US polymer plants has focused container shipping on the port of Houston, which is near many plastic plants.

The Houston port is the top US crude oil export hub, according to Florida research firm WorldCity.

Port Houston ranked seventh in total containers handled in 2018, according to Cushman & Wakefield.

Port Houston has opposed the legislation, mainly because of the vessel-length restriction, but it will take a veto by Abbott to stop. Abbott’s veto sounds unlikely at this point, Port Director Roger Guenther said at a late May shipping conference.

"While we realise that Governor Abbott may not veto the bill, we are still hopeful that he does,” Guenther said in a statement.

Abbott’s office has not responded to calls seeking comment on whether he will veto the bills or not.

State laws may not apply, though, because the 52-mile (84 km) ship channel is a federal waterway.

Rear Admiral PF Thomas, commander of the Eighth Coast Guard District, which includes Houston, wrote a letter to Abbott in May asking the Texas governor not to enact the state legislation because it conflicts with federal law.

Port Houston chairman Ric Campo said he thought Thomas made a “compelling point” and has said the issue may end up being decided by a court because of the federal versus state conflict.

Oil exports have become a focus on the US Gulf Coast and in Houston. The value of all oil, gasoline and other fuels accounted for about 49% of all exports at the Port Houston through March 2019, according to US Census Bureau data.

Image above shows a container ship on the Houston Ship Channel. Photo by Al Greenwood

Focus article by Lane Kelley

Chemicals, including plastics, represented 11% of exports at Port Houston.