The Trump administration touted the new licensing on Feb. 3 of the Texas GulfLink project—a crude oil-exporting terminal proposed in the deepwater Gulf of Mexico, about 30 miles offshore of Texas—claiming the country is restoring its “maritime dominance” and unleashing a new “golden age of American energy.”
But one key voice was missing from the celebration: Texas GulfLink’s developer. Dallas-based Sentinel Midstream declined to comment on the administration’s announcement, and didn’t issue any press release for its politically ballyhooed project approval.
Sentinel’s silence was a symptom of a bigger disconnect in the gulf. What once was a race to build a series of deepwater terminals prior to the pandemic—including the involvement of household names such as Phillips 66 and Chevron—has now turned into silence over stalled projects that may never come to fruition.
There simply isn’t enough crude demand or customer support to justify building them any longer, even though U.S. oil output is hovering near all-time highs, energy analysts said. At best, projects could be revisited in 2027, when and if the U.S. oil industry rebounds from a weaker price environment, said Keland Rumsey, East Daley Analytics energy markets analyst.
“Certainly, in the short term, it doesn’t really seem like it’s a necessity, or that these people would be incentivized to actually build the offshore export facilities,” Rumsey told Fortune, noting that the potential influx of more Venezuelan oil creates added uncertainty.
Shifting goals
When Congress lifted the nation’s 40-year ban on exporting oil—in place since the Arab oil embargo—at the end of 2015, U.S. oil production was booming. Companies were building up oil-export terminals to ship Permian Basin oil overseas from the Houston Ship Channel and the Port of Corpus Christi.
The U.S. now routinely exports more than 4 million barrels of crude oil each day—about as much as Iraq pumps from the ground in total.
There was just one catch. The biggest crude oil tankers, VLCCs—yes, they’re called Very Large Crude Carriers—either couldn’t dock or fill up all the way at Texas ports because of the shallower water depths. Instead, smaller tankers must load the crude and then transfer the oil to the VLCCs in deeper waters—a more time-consuming and expensive maritime exercise.
Hence, came the idea—and the subsequent mad dash—to license and build deepwater oil terminals offshore of Texas.
The leading contenders were Enterprise Products Partners’ Sea Port Oil Terminal, called SPOT, with Chevron signed on as the anchor customer; Texas GulfLink; Energy Transfer’s Blue Marlin project; and Phillips 66’s Bluewater terminal.
But, just as the race was heating up, the COVID-19 pandemic struck and temporarily collapsed oil markets. Because the terminals are proposed offshore, they needed U.S. Coast Guard and Maritime Administration approvals for a new type of infrastructure. The Biden administration wasn’t exactly fast-tracking the process.
By the time the first project, Enterprise’s SPOT, was fully licensed in 2024, Chevron had left as the anchor customer and so had the joint venture developer, Enbridge.
Rather than export more crude oil, Chevron said it decided to focus on domestically refining more of its oil into petroleum products, such as diesel and jet fuel, and then exporting those higher-value products instead.
Enterprise spokesman Rick Rainey said the company is still “working to commercialize the project” with potential customers, and will then decide whether to proceed with construction or not.
Funding the SPOT
Enterprise co-CEO Jim Teague last mentioned SPOT during an earnings call 12 months ago, when he complained about the prolonged permitting process and said SPOT should be the “poster child” for reform. But he acknowledged the industry’s fundamentals had shifted as well.
Teague said the industry wrongly forecasted that crude exports would have grown even more by now. What’s more, he added, because of Europe moving away from Russian oil after the Ukraine invasion, more U.S. oil is going to Europe instead of Asia. The shorter trips to Europe don’t require as many of the largest tankers—undermining demand for the deepwater terminals.
“We have not gotten enough traction in commercializing SPOT, though we continue to promote SPOT as we are the only company with a license to construct,” Teague said a year ago.
Now, Texas GulfLink is licensed as well, but it is seemingly not prepared to act on its license for the time being.
The Blue Marlin and Bluewater projects remain unlicensed. Energy Transfer hasn’t mentioned its project in an earnings call since 2024 and, for Phillips 66, it’s been even longer.
Phillips 66 still has pending emissions issues with the project’s air permit application under the Environmental Protection Agency. Phillips 66 spokesman Al Ortiz said in a statement, “We will await the decisions and next steps of the permitting agencies.”
In the meantime, the Trump administration remains enthused about the Texas GulfLink licensing.
“The war on American oil and gas is over,” said Transportation Secretary Sean Duffy in a statement. “The Texas GulfLink project is proof that when we slash unnecessary red tape and unleash our fossil fuel sector, we create jobs at home and stability abroad. This critical deepwater port will allow the U.S. to export our abundant resources faster than ever before.”
