Tuesday, June 18, 2013

Changes Come to the Columbia

The Pacific Northwest’s Columbia River System, which includes segments of the Willamette and Snake Rivers, has seen a number of recent developments take place that will affect its future. One of the most recent is the decision by Seattle’s Foss Maritime Company to withdraw from the river, with its local ship-assist and towing business to be sold to competitor Tidewater Barge Lines. The move, which takes effect this month, reflects a feeling by Foss that business is not expected to grow on the river, and that there is a strong probability of fewer ships calling. Shortly after the Foss announcement, terminal operator Kinder Morgan disclosed that it had given up on its plans to open a new $150 million coal exporting facility on the river near St. Helens. Although environmentalists quickly took credit for the decision, company spokesman Allen Fore said a “suitable site” at Port Westward for terminal construction could not be found.
Grain exports, long one of the river’s most stable trades, has been troubled recently by labor lock-outs at the United Grain terminal at Vancouver and the Columbia Grain and Louis Dreyfus terminals at Portland. Protests have also taken place at grain facilities located at Kalama and Longview, which could impact the long-range plans of shippers.
One positive development for the river’s future, at least in the shipyard sector, has been a decision by Portland-based Vigor Industrial to order a new 960-foot by 186-foot floating drydock from China’s Daoda Marine Heavy Industry Company. To have a lifting capacity of 80,000 long tons, the company expects the drydock will bring back business lost to the river when Vigor sold an earlier 87,000-long-ton capacity drydock to the Grand Bahama Shipyard in 2001.
Seattle’s Foss has also elected to retain its yard at Rainer, Oregon, considered one of the more successful small boat builders on the West Coast. Still a question mark is the arrival of bulk crude oil on the river for coastal distribution by tank vessels, a potential new business for several ports.
Crude Oil Boom
While coal has been the big story on the Columbia over the past several years (See Pacific Maritime Magazine, June 2012) crude oil suddenly stepped into center stage this year, with a terminal at Clatskanie, Oregon already receiving and shipping crude brought in by rail from the Dakotas.
Originally built to store and ship ethanol, the Port Westward facility was purchased by Global Partners of Massachusetts in January and its enthanol tanks converted over to hold crude. Although the facility’s handling volume is limited, a much larger transshipment terminal is being planned at Vancouver, Washington where oil major Tesoro and Salt Lake City-based Savage Companies have joined forces to plan, develop and operate a major transshipment center. Expected to be operational by next year, the facility is being designed to initially handle about 120,000 barrels of crude daily, but near-term expansion could boost the figure to 280,000 barrels.
Subject to regulatory approval, the new Tesoro/Savage joint venture will own rail unloading and marine loading facilities while land will be leased from the port, initially for ten years. Savage will oversee and manage design, construction and operation on the joint venture’s behalf, with the crude expected to move to Tesoro’s refineries in California by both ship and barge.
Vancouver’s availability of land and its rail infrastructure, including a loop track that can accommodate unit trains of more than 100 cars, played a large part in Tesoro’s decision, with the oil firm noting the port “is uniquely positioned to serve as a hub for the distribution of North American crude oil to West Coast refining centers.”
Coyote Island Terminal
As regional environmentalist now turn their attention to a potential flood of bulk oil shipments coming down the Columbia gorge they have not forgotten coal. Although three West Coast coal projects have been cancelled at Grays Harbor, Coos Bay and Port Westward, a rail-to-barge transshipment facility is still being planned at the Port of Morrow, Oregon and a larger terminal is under consideration at Longview, Washington. In addition, there are plans to install a floating barge-to-ship transfer plant at Port Westward on the lower Columbia to handle barge traffic from Morrow. However, a spokesman for the Army Corps of Engineers said the government agency has received more than 30,000 public comments during an initial 60-day comment period following the permit filing for the Morrow terminal, and that it is still waiting for responses from regional indian tribes, the Oregon State Historic Preservation Office, the National Marine Fisheries Service, and the US Fish and Wildlife Service.
There is no estimate on how long the consultation process on the proposed facility will take but its promoter, Ambre Energy, has indicated that it would like to start construction next year. To be known as the Coyote Island Terminal, the finished complex would be able to transfer up to 8 million metric tons of coal annually from rail cars to barges. The barges, to be built on the river, would then be moved to Port Westward. There, the coal would be transloaded to Panamax-size bulk carriers using a floating Siwertell discharge/load unit. Ambre has said it would pay approximately $850,000 to the Port of Morrow in port fees, and about $1.6 million in property taxes to Morrow County, while creating around 35 family wage jobs.
Millennium Bulk
Ambre is also the lead investor in the proposed Millennium Bulk Terminals project at Longview, Washington where investors hope to build a $643 million export facility at the former Reynolds Metals site. In May, federal, state and Cowlitz county regulators selected a Virginia-based consultant, ICF International, to help prepare an environmental impact statement for the proposed terminal. ICF will help the Corps of Engineers, the Washington Department of Ecology and Cowlitz County officials collect public comment on the project.
Ken Miller, Millennium CEO, said the company is “happy” to have a contractor on board as it is the first step in moving forward with the permitting process. With a targeted throughput of 44 million metric tons annually at full build-out, the Longview facility would receive coal using as many as 16 unit trains a day while being capable of loading two ships simultaneously. However, Ambre has been forced to focus its attention on a disagreement it has with Cloud Peak Energy over ownership of the Decker mine in the Rocky Mountains, a mine that is expected to be the source of much of the coal moving to the Columbia.
Ambre and Cloud Peak, the latter considered one of the nation’s largest coal producers, jointly own the mine but Ambre would like to take full control. In turn, Cloud Peak wants land and rail easements for a new mine it wishes to develop in Wyoming and an option to ship as much as 5 million tons of coal annually through the completed Millennium facility.
Not a party to the Millennium project, the nearby Port of Longview has set its sights on the Dakota oil business but not on the oil itself. Instead, the Washington port is interested in heavy project cargo that the oil developments might generate. With this in mind, port commissioners voted in May to purchase a second mobile harbor crane that could be teamed with the port’s existing Liebherr unit to handle bulky heavylift freight. A down payment of $1.5 million has already been placed on a used Liebherr unit at the Port of Rotterdam, Holland, with the full purchase price of $3.9 million to be made using commercial loans.
“It gives us another tool in our tool belt to attract more cargo,” said Doug Averett, the port’s director of operations. Averett noted that the two cranes, working together, could easily handle large refinery parts coming from Asia and destined for the Dakotas. To make the new crane as flexible as possible the port will spend another $396,000 on handling equipment and attachments. Fortunately, Longview is in a sound enough financial condition to make the investment, particularly after posting its fifth consecutive record revenue year.
Most of the income has come from surging grain exports generated by the new EGT elevator, which shipped 4.68 million tons of wheat, soy beans and corn last year, representing nearly two-thirds of all tonnage handled at Longview. In total, the port generated $33.8 million in docking fees and rent last year, a 20 percent jump over 2011 and producing $8 million in net operating income.
EGT officials have said they expect to export about 8 million tons of grain annually once the elevator is working on a full-year basis. This will create additional revenue for Longview and will help offset a 28 percent decline in calcined coke exports and a 40 percent slump in log loadings.
While container numbers have yet to rebound to their pre-recession level at the Port of Portland, and annual grain shipments have remained static at around 4 million tons, mineral bulks have been growing. That has persuaded terminal operator Kinder Morgan to invest $9.5 million in its soda ash export facility at the port’s Terminal 4, where a new shiploader conveyor system is being installed. The upgrade is part of a 10-year lease extension agreement, with two five-year options, signed between Kinder Morgan and the Port at the start of the year.
The investment is being made in conjunction with several other projects to help boost productivity. This includes the dismantlement of an old Dravo loader and dredging of the facility’s loading berth, with the loader now gone and dredging to be completed by September.
Soda ash handled at the terminal, which is used in the manufacture of glass and detergents, has been coming from Wyoming by unit train and is being exported to the Pacific Rim by the American Natural Soda Ash Corporation (ANSAC). Looking at a growing potential for additional mineral exports, Portland is continuing to explore the creation of an entirely new cargo-handling complex on West Hayden Island. However, the required property will first have to be annexed by the City of Portland, an action to be considered by the Portland City Council later this year.
The port would like to develop facilities for the handling of several types of bulks, as well as motor vehicles, on the island but after watching what developers of potential coal terminals along the river have had to go though, officials are concerned that the demands of environmental groups could push development costs to an unrealistic level. In the meantime, container volumes through the port have been down 11.8 percent through the first quarter, with only 48,440 TEUs moved compared to the same period last year, while grain shipments have been off 14 percent.
Vigor Industrial
While development of West Hayden Island is still to be decided upon, Portland-based Vigor Industrial has already made a decision to expand its shipyard capacity on the river by ordering a new 960-foot by 186-foot floating drydock from China’s Daoda Marine Heavy Industry Company. To be delivered to the company’s yard on the Willamette river early next year, the new dock will have a lifting capacity of 80,000 long tons, making it the largest floating drydock in the United States.
Tesoro Corporation, with partner Savage Companies, plans to deliver crude by rail to the Port of Vancouver, Washington where an existing loop track for unit trains will be employed and a new marine facility built. Photo courtesy of the Port of Vancouver.
“We decided now is the time to buy because demand to service large vessels is growing and large drydock capacity in proximity to the US West Coast has diminished,” said Vigor Industrial CEO Frank Foti, who added that the new dock’s first job will likely be to prepare Vigor’s largest existing drydock at Portland for use at Vigor’s Seattle yard. This would provide the Seattle facility with expanded capacity to service larger vessels in Puget Sound. At the same time, the Chinese-made dock at Portland will allow Vigor to lift the US Navy’s newest generation of Military Sealift Command dry cargo/ammunition ships as well as post-Panamax cargo and cruise vessels.
Vigor previously owned an 87,000-long ton capacity, Japanese-built drydock at Portland, which it acquired with the purchase of the Portland Shipyard in 1998, but sold that unit to the Grand Bahama Shipyard in the Bahamas when Alaska tanker traffic began to decline in 2001.
“The new drydock will allow us to meet future demand, grow our business and put more people to work across the Pacific Northwest,” said Foti.