Storage And Terminating VopakMexico

Energy reform by Mexico encourages development of transloading, storage terminals to handle US fuel exports

Feb. 3, 2018
WITH Mexico’s growing appetite for US refined fuels, a number of US companies have launched initiatives to provide the needed storage and terminaling infrastruc

WITH Mexico’s growing appetite for US refined fuels, a number of US companies have launched initiatives to provide the needed storage and terminaling infrastructure to handle the surge in rail and marine shipments of petroleum products.

Current projections indicate that Mexico’s demand for refined petroleum fuels is projected to grow by 40% over the next 25 years. Local oil production hasn’t been able to keep pace with the growing demand, which prompted Mexico’s federal government to pass energy reform legislation in 2013.

The legislation put into motion a process that culminated before 2018 in the country’s energy markets being fully open to foreign investment and the importation of refined energy products, including gasoline and diesel. It should be noted that by 2016 Mexico was already the destination for 52% of US gasoline exports and 15% of distillate exports, according to the US Energy Information Administration. 

Shipments of US diesel and gasoline exports almost certainly will be boosted by the rail- and marine-served terminal infrastructure being developed by US companies and their partners.

Savage transload

A subsidiary of Salt Lake City, Utah-based Savage Companies began operations of its new petroleum transload terminal in central Mexico at the beginning of January, with plans to significantly expand terminal capabilities later in 2018. Located near the city of Querétaro, the terminal is served by the Kansas City Southern de Mexico railroad and provides access to strategic ports and US-based refinery centers.

The Querétaro terminal provides an optimal location for transferring and storing refined petroleum products. Initially, the terminal will serve manifest rail volumes, transloading products directly from railcars into trucks. Following permitting approvals, Savage plans to add tank storage and fixed facilities for high-speed rail unloading, product blending, and truck loading. At full build out the terminal will handle unit train volumes.

“We’re excited to leverage our team’s experience operating transload facilities and rail operations to reduce the logistics costs of moving and managing refined petroleum products in Mexico,” said Kirk Aubry, Savage president and chief executive officer. “Our strategic location and capabilities, together with our team’s focus on providing safe, efficient and reliable service, will enable customers to have a trusted partner in getting their products to market on time and on budget. 

“We have a long history working with KCS and all Class I railroads, and we look forward to working together with Kansas City Southern de Mexico to provide a world-class petroleum transload terminal in Mexico.”

USD Group

KCS also will serve the transload terminal being built in Querétaro by USD Group LLC’s subsidiary Querétaro Energy Terminal. The

terminal should be operational in the first quarter of 2018.

“Our investment in QET provides an attractive opportunity to establish a presence in the growing Mexican market while leveraging our logistics expertise in support of an existing and profitable business,” said Steve Magness, USDG’s vice-president, business development. “We believe rail will provide the timely, flexible, and sustainable distribution capabilities necessary to improve access to energy supplies that will help fuel Mexico’s economic growth.”

Bulkmatic Transport Company and KCS signed a memorandum of understanding in August 2017 to form a 50/50 joint venture investment that will include the construction of a unit-train liquid fuels terminal located in Salinas Victoria near Monterrey, Nuevo Leon, Mexico. The facility will be served by Kansas City Southern de Mexico SA de CV (KCSM).

The joint venture partners will invest approximately US $50 million over the next few years to develop the terminal, which will begin limited operations in third quarter and have storage facilities in mid-2018 that will provide retail fuels for the population of the Monterrey metropolitan area.

“We are pleased to pursue this joint venture to expand the export of US petroleum products into Mexico,” said KCS president and chief executive officer Patrick J Ottensmeyer. “The terminal will provide vitally needed refined energy products and boost job creation in the United States and Mexico. The project neatly aligns Mexican energy reform goals with US refining companies’ desire to expand their operations into new markets.”

Alfie Bingham, Bulkmatic chief executive officer, said: “We are excited to partner with KCS to create a cost-efficient linkage between Mexican consumers and US producers of refined products. This project will benefit economies on both sides of the border by providing consumers in Mexico access to more suppliers, and refineries in the United States access to important new markets.”

On the marine side, Koch Supply & Trading Mexico is importing ultra-low sulfur diesel (ULSD) into Mexico through the Port of Veracruz. Product is being supplied via Koch’s US export system and is being delivered through a multi-year services agreement with the newly revamped Veracruz facility owned and operated by Vopak Mexico which obtained the first regulatory authorization for an independent party to store and handle petroleum liquids.

“This is an important new supply route to Mexico for transportation fuels produced by US refineries such as Koch Mexico’s affiliate, Flint Hills Resources, which operates a 300,000 barrel per day facility in Corpus Christi, Texas,” said Pete Ramirez, vice-president of Koch Mexico. “Koch Mexico plans to import up to 40,000 barrels (6.4 million liters) per day of these products into Veracruz, and our intention is to lower costs for the citizens of Mexico.

“By working with Vopak and the regulatory agencies in Mexico we are now able to provide downstream distributors and retailers the opportunity to augment the supplies of fuel that are currently available in the market. We are planning to be a reliable importer of petroleum products as part of a long-term strategy for development in the country.”

Cristhian Perez, managing director of Vopak Mexico, said: “We are proud to contribute to more security of supply for the Mexican energy market by developing improved storage and logistics solutions. Working with established industry leaders like Koch allows us to break through into the Mexican fuel storage market, which has been opened by the energy reform, ultimately benefitting Mexican consumers.”   

About the Author

Charles Wilson

Charles E. Wilson has spent 20 years covering the tank truck, tank container, and storage terminal industries throughout North, South, and Central America. He has been editor of Bulk Transporter since 1989. Prior to that, Wilson was managing editor of Bulk Transporter and Refrigerated Transporter and associate editor of Trailer/Body Builders. Before joining the three publications in Houston TX, he wrote for various food industry trade publications in other parts of the country. Wilson has a bachelor's degree in journalism from the University of Kansas and served three years in the U.S. Army.