February 12, 2019 Port Houston Update Rich Byrnes | Chief Infrastructure Officer | Port Houston Discussion Topics • Port Houston 2018 Highlights • Focus: Houston Ship Channel • Development Plans PORT HOUSTON | 1 Breakfast! PORT HOUSTON | 2 Lots of Work Behind the Scenes PORT HOUSTON | 3 Economic Activity PORT HOUSTON | 4 Port Houston… Behind the Scenes PORT HOUSTON | 5 1899 PORT HOUSTON | 6 2019 PORT HOUSTON | 7 Port Houston’s Success: Growth supported by Innovation 25 -25 20 -30 15 -35 10 -40 5 -45 0 1920 1940 1960 1980 2000 2018 Texas Population, Millions Total POH Cargo x 10 Millions Container TEU's x 100,000’s Ship Channel Depth, feet (right axis) PORT HOUSTON | 8 Containers PORT HOUSTON | 9 Container Growth 3.3 3,000,000 2023 2.7 2.4 2,500,000 2.2 2018 2.1 1.9 2,000,000 IMPORTS EXPORTS TOTAL 1,500,000 1,000,000 500,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: Totals include empty containers Source: PHA Accounting, PHA Market Development PORT HOUSTON | 10 Steel PORT HOUSTON | 11 Steel up 21% 6.7 $98 $93 4.8 4.7 4.4 3.7 $65 $48 $50 2.2 $43 2013 2014 2015 2016 2017 2018 Steel MM Tons WTI Annual Average $/BBL PORT HOUSTON | 12 2018 Built: Container Yard 6 South @ Bayport PORT HOUSTON | 13 2018 Built: Container Yard 1 and East End at Barbours Cut PORT HOUSTON | 14 Rehabilitating Old City Docks PORT HOUSTON | 15 Priority: Freight Mobility Example Current & Potential Area Projects 99 Sections H & I Crosby-Lynchburg Improvements SH 330 Connectivity Peninsula Road Expansion RR Double-track at Broadway BW-8 Bridge Expansion SH 225 Expansion& Connectors Container Barges BCT Blvd to 146 connectors BCT Bayport Port Road and RR Spur BPT I-69 / 99S bypass Other road and rail improvements Ship x Inland distribution (not shown) Channel PORT HOUSTON | 16 Project Start: Peninsula Road improvement Working with TxDOT and Harris County PORT HOUSTON | 17 PORT HOUSTON | 17 Project Start: Broadway Double Track PORT HOUSTON | 18 PORT HOUSTON | 18 Future is Bright, Supported by Fundamentals PORT HOUSTON | 19 Population Driving Imports Map Source: Urban Institute Mapping America’s Futures PORT HOUSTON | 20 Manufacturing Driving Exports New Petrochemical Project Announcements – USGC 2012 Source: Lee Nichols, Hydrocarbon Processing Magazine, Energy Construction Form 3/16 PORT HOUSTON | 21 Manufacturing Driving Exports New Project Announcements – Through Q1-2016 Source: Lee Nichols, Hydrocarbon Processing Magazine, Energy Construction Form 3/16 PORT HOUSTON | 22 Energy Sea Change US Crude Oil Exports Since 1920 PORT HOUSTON | 23 PORTPORT HOUSTON HOUSTON | 24 | 24 TOPIC: RESIN PERFORMANCE PORT HOUSTON DOMINATES US POLYETHYLENE EXPORT Graph: US Waterborne PE Exports by Port Units: Metric Tons; Time: 12 months to Oct 2018 (latest available data) Source: Customs Data from Census Bureau 80,000 teus 160,000 teus 240,000 teus 320,000 teus 0 1,000,000 2,000,000 3,000,000 4,000,000 Houston 72.1% LA/Long Beach 11.0% US Market Share % New Orleans 8.8% Charleston 3.8% Port Houston handles 7 out of 10 Freeport TX 1.8% containers of US waterborne PE export All Other US 2.5% Ports The top six ports control 98% of waterborne exports PORTPORT HOUSTON HOUSTON | 25 | 25 TOPIC: RESIN PERFORMANCE POLYETHYLENE EXPORT GROWTH Graph: US Waterborne Export of Polyethylene (PE) Resin Monthly Metric Tons through Oct 2018 (latest availabledata) Source: Customs Data from CensusBureau Future PE 800,000 Export Growth 64,000 teus All US Houston Other Ports 600,000 48,000 teus All US Ports Total (+40.4%) US PE export has exploded in 2018, as 400,000 predicted. 32,000 teus Port Houston PE tonnage has 200,000 increased twice as 6,000 teus Port Houston (+37.8%) much as all other US ports combined in 12 Other US Ports (+47.7%) months to Oct 2018 0 Percentage change reflects 12 months 2014 2015 2016 2017 2018 2019 to Oct 2018 vs. 12 months to Oct 2017 PORTPORT HOUSTON HOUSTON | 26 | 26 TOPIC: RESIN PERFORMANCE POLYETHYLENE EXPORT TRADELANE GROWTH Graph: Growth in US PE Exports by Tradelane Based on Metric Tons in 12 months to Oct 2018 minus 12 months to Oct 2017 Source: Customs Data from Census Bureau 32,000 teus 32,000 teus 64,000 teus 96,000 teus -400,000 0 400,000 800,000 1,200,000 Total Europe Europe has been absorbing significant East Asia amounts of incremental Latin America PE exports. This was not anticipated by South Asia market experts. Australia East Asia has been North America underperforming Africa expectation. This may be due to tariffs in Middle East China. PORTPORT HOUSTON HOUSTON | 27 | 27 PORTPORT HOUSTON HOUSTON | 28 | 28 PORTPORT HOUSTON HOUSTON | 29 | 29 TOPIC: EQUIPMENT BALANCE PORT HOUSTON CONTAINER BALANCE Graph: Port of Houston Container Volume by Type Source: PHA Accounting Units: Monthly TEUs 120,000 100,000 Loaded Exports 80,000 60,000 Today, loaded imports exceed Loaded Imports loaded exports 40,000 20,000 Empty Imports 0 Empty Exports 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 PORT HOUSTON | 30 Priority: Houston Ship Channel Houston—USA’s Busiest Channel 9,945 5,508 Houston: 3,860 22,000 ship moves 200,000 barge moves LA+LB NY/NJ Houston Deep Draft ShipPORTPORT HOUSTON Calls HOUSTON | 31 | 31 Sept 10, 2018 PORT HOUSTON | 32 USACE “Megastudy” Current Plan WIDER Deeper:+4 ft +5 ft +4 ft WIDER WIDER WIDER PORT HOUSTON | 33 Revised Plan features include a flaw that does not satisfy needs of industry or pilots current Federal Recommended Plan 530’ No widening, 1-way channel (operationally unsound, unsafe) 2-way channel 700’ proposed Widening is necessary for safety and efficiency PORT HOUSTON | 34 Industry Inputs: Cannot constrain national economic growth Oil & Gas Plays in the “Shale Revolution” Manufacturing, Population and Jobs supported by Oil & Gas USGC Petrochem Drilling and Production Projects PORT HOUSTON | 35 Update on Sediment Capture & Control PORT HOUSTON | 36 Before Harvey 8/22/2017 PORT HOUSTON | 37 After Harvey 8/31/2017 PORT HOUSTON | 38 Cost of Draft Restrictions 1 foot Shoaling can cost shipping over $300 million per year 3 feet can cost Container ships $1 million in revenue for each ship call Extra costs translate into higher prices for goods PORT HOUSTON | 39 1935 Flood-Turning Basin Terminal “Shipping was tied up for days, and all of Texas suffered as a result ” “tons of mud and wreckage were dumped into the channel” “serious navigation hazards” PORT HOUSTON | 40 Key Q: How to include Sediment Capture and Control in Flood Control Projects? PORT HOUSTON | 41 30’ Authorized 36’ Authorized +7’ sump Mitigation on +2’ adv maint the Channel Side PORT HOUSTON | 42 Land side: Driving Toward Success Storm Water Protect City of Houston Prevent Silt in Management the Ship Channel Flood Control “Options” for SCC: • Detention basins • Enlargement and rectification of channels • Construction of control works • Diversions and soft solutions Mitigation on • Source control management the Land Side PORT HOUSTON | 43 SCC Working Group Established • Initial members: – HCFCD – CoH Resilience Office – PHA – USACE (invited) • Focus areas – Technology – Policy – Funding HCFCD = Harris County Flood Control District CoH = City of Houston PHA = Port of Houston Authority USACE = US Army Corps of Engineers PORT HOUSTON | 44 Illustrative Work Program Container Truck Gates Wharf Rehab New Yards E F Energy Sustainability D A Utilities Improvements B C Security Systems Crane Demo Dock Demo A Turning Basin Terminals G Concrete Structures B Public Grain Elevators 1 and 2 C Woodhouse Drainage Systems D Bulk Terminal E Jacintoport Rail Extensions F Care Terminal G Barbours Cut Container H Road Expansions Terminal H Bayport Container Terminal Cargo Handling PORT HOUSTON | 45 Design Program Highlights All - Rail Switch Replacements BCT CY2 Mid-South Yard Reconstruction All - Fender Replacements BCT Maintenance Complex BCT Intersection @ 146 BCT CY 3 Reconstruction TB Wharf Rehabilitations BCT West Yards TB Transit Shed Utilities and Facilities BCT Channel Widening TB Lower Level Road and Utilities Redesign TB Transit Shed Re-Roof / Re-Skin BPT Truck Gate Lanes TB Wharf 33 and Dredging BPT Wharf 6 CPS & Power BPT Wharf 4-5 Strengthening Care Roof Replacement BPT SS Building Jacintoport Transit Shed Refurb BPT / BCT Move Cranes WH Concrete Road BPT East Empty Yard Utilities and Boundaries WH Wharves Rehab BPT Wharf 7 BW-8 Yard, Land Access and Wharves BPT East End PORT HOUSTON | 46 PORTPORT HOUSTON HOUSTON | 47 | 47 BCT CAPEX Phasing Plan WHARF 5/6 WHARF 4 WHARF 3 CY 4 N&S CY 5 N&S CY 1&2 N. CY 3 ADM TBD CY 2 M&R S. ENTRY GATE ENTRY GATE PORTPORT HOUSTON HOUSTON | 48 | 48 PORT HOUSTON | 49 Bayport CAPEX Phasing Plan WHARF 7 WHARF 6 WHARF 1 CY 1 N. CY 7 CY6 S – CY 2 Complete S. CY 1 S. East Empty Yard West Empty Yard - Complete PORTPORT HOUSTON HOUSTON | 50 | 50 Turning Basin Rehabs PORT HOUSTON | 51 Turning Basin Rehabs PORT HOUSTON | 52 Evaluating New Tech Deployed Emerging e Conceptual PORT HOUSTON | 53 Intelligent Transportation Systems PORT HOUSTON | 54 Priority: Awareness and Connection to Community PORT HOUSTON | 55 PORT HOUSTON | 56 Houston, Buffalo Bayou and East End… PORT HOUSTON | 57 “Lighthouse” Observation Deck Turning Yolanda Navarro Nature Center Black Nature Center Footbridge Basin Water Taxi Dock, Bayou Sam Houston Viewing Decks South & North Pavilion Access And Pumpstation Innovation Center with Walking Path Sediments Buffalo Sump Park Bayou Footbridge Hidalgo Park What If… Turning Basin Innovation Complex PORT HOUSTON | 58 Source: SWA Group PORT HOUSTON | 59 Oct 20, 2018 Berm Planting & Dedication PORT HOUSTON | 60 Within sight of the Terminals PORT HOUSTON | 61 Communities, Port and Industry Working Together PORTPORT HOUSTON HOUSTON | 62 | 62 THANK YOU Rich Byrnes Chief Infrastructure Officer Port Houston Questions? 713.670.2400 [email protected] www.PortHouston.com PORTPORT HOUSTON HOUSTON | 63 | 63.