Tuesday, October 1, 2013

Development at Gulf Coast Ports Surges

By Jim Shaw

Ports along the Gulf Coast of Mexico are continuing to look south to potential new container business to be generated by new locks at the Panama Canal but bulk commodities such as coal, oil and gas are also driving development. The sudden oil shale energy boom has rocked the petroleum transporting industry, with the Port of Corpus Christi alone developing eight new docks and 10 million barrels of new crude storage capacity to handle Texas-produced Eagle Ford shale oil. At the same time Swiss energy trader Vitol has selected the Port of Beaumont, Texas as the location for its new LPG export terminal, while the Port of New Orleans has just inaugurated its Gulf Gateway Terminal (GGT) to handle crude oil transshipment from rail to barge.

In the container sector the Port of Houston Authority (PHA) has ordered four super-post-Panamax ship-to-shore cranes and three rubber-tire gantry cranes from Finland’s Konecranes for its Barbours Cut and Bayport terminals in a deal worth approximately $56 million. In Louisiana, AECOM Technical Services has started the design of a new Mississippi River Intermodal Terminal (MRIT), which will enhance container-to-rail movement at the Port of New Orleans’ Napoleon Avenue Container Terminal. Breakbulk and unitized cargoes are also expanding on the Gulf and Houston-based Intermarine has concluded an $82 million sale-and-leaseback agreement for an expanded terminal handling breakbulk and project cargoes on the Houston Ship Channel. At the same time, Alabama Steel Terminals has cemented a deal with the Alabama State Port Authority (ASPA) for the development of a $36 million steel handling facility at the Port of Mobile.

The deepwater offshore sector is also generating port development, particularly at Louisiana’s Port Fourchon where $75 million is being spent to develop a third slip and open up an additional 280 acres of waterfront property for the support of offshore supply vessel operations.

Alabama’s Port of Mobile has been one of the Gulf Coast’s more successfully diversified ports, handling containers as well as bulk and breakbulk commodities. During its latest fiscal year it moved more than 25 million tons of cargo and nearly 200,000 TEUs of containers. More than half of the port’s tonnage is handled at the McDuffie coal terminal, where exports have increased five percent since the installation of new equipment last year that converted an import-only berth into a combination import/export facility. The port’s container traffic, moved largely through the APM facility at Choctaw Point, has witnessed a 22 percent increase over the past year and is expected to see another surge in 2015 when a new Intermodal Container Transfer Facility (ICTF) is opened. Among breakbulk cargoes, steel posted a 26 percent increase over the past fiscal year and in July the port approved a concession agreement with Alabama Steel Terminals to develop a new $36 million steel coil handling facility for the auto industry. To be served by rail, truck and barge, the terminal will be constructed at Pier D2 and located on a 40-foot deep channel.

Alabama Steel Terminals, a joint venture between TriState Maritime Services and the Richardson Group of Companies, will operate and manage the facility, which will be built in two phases. The first phase will see 178,200 square feet of covered storage area built adjacent to 168,000 square feet of open storage, with three 50-ton capacity overhead bridge cranes installed. The second phase will add a 194,400-square-foot bay area equipped with three additional 50-ton capacity overhead bridge cranes. James K. Lyons, the port’s director and chief executive, said the entire facility should be complete within two to three years.

West of Mobile, the Mississippi state port at Gulfport is continuing to move forward with facility expansion after the devastation of hurricane Katrina eight years ago. Almost wiped out by the hurricane, Gulfport has been steadily rebuilding using approximately $600 million in federal relief funds. The port has recently launched its West Pier Expansion Project (WPEP) under the supervision of new port executive director Jonathan Daniels. In July, Wilmington, Delaware-based DuPont agreed to lease property on the pier for another 30 years, with options to extend the agreement for up to 60 years. This will provide a long-term anchor tenant for the expanded structure, which will also support the operations of banana and produce importers Dole and Chiquita.

The port plans an estimated $80 million in improvements to seven acres on the southern tip of the pier where DuPont will expand the number of storage silos it maintains for imported ilmenite ore. The company will also install a new conveyor system to handle the mineral product, which is used in the manufacture of titanium dioxide, a pigment used in paint, paper and plastics. DuPont will pay $57 million of the construction costs involved in its portion of the project, due to be completed in 2016, while the port will pay $23 million and retain ownership of the complex.

Daniels noted that preliminary negotiations are also underway with a potential new tenant for the pier but stressed that federal relief funds will not be used for this customer nor the DuPont expansion.

New Orleans
On the Mississippi River the Port of New Orleans is planning to double its annual container capacity to 1.6 million TEUs through the build-out of the Napoleon Avenue Intermodal Terminal as well as the development of an adjacent intermodal container transfer facility (ICTF). The Louisiana port received a $16.7 million federal transportation grant last year for improvements at Napoleon Avenue and the port’s Board of Commissioners recently contracted AECOM Technical Services to begin design work on the intermodal facility. The latter will be constructed on the site of an existing 12-acre rail yard, which will be re-configured and modernized. Work is due to begin in December with completion targeted for late 2014.

“The Port of New Orleans is the only US seaport with six Class One railroads serving it,” observed the port’s President and CEO, Gary LaGrange. “This project will facilitate the movement of marine and rail cargo, stimulate international commerce and enhance safety all while reducing the carbon footprint of the regional and national transportation systems.”

The Port, in partnership with the Louisiana Port Construction and Development Priority Program, is matching a portion of the federal grant to help build an adjacent 4-acre container marshaling yard. Local contractor Hard Rock Construction was contracted this past summer to pave the facility. In the long term, the port of New Orleans is seeking private funds from interested terminal operators, shipping companies and private investment groups to help it complete a planned $580 million full buildout of the Napoleon Avenue terminal. Recent legislation signed by Louisiana Governor Bobby Jindal has expanded tax incentives to entice such investment.

In Texas, Swiss energy trader Vitol has made its final decision on a major LPG storage and export facility it plans to develop at the Port of Beaumont. Vitol announced in February that it intended to have the export terminal ready for business by 2014 but that date was extended into 2015 when Japanese energy company Itochu took a 34 percent stake in the project. In partnership with Itochu, Vitol plans to scour gas storage caverns out of a subterranean Texas salt dome in a $500 million project that will allow it to process up to 100,000 barrels per day of propane and butane, giving it an exporting capability of up to 3 million tons per year.

The two companies noted that the site, which has permits for up to 30 million barrels of storage capacity, can easily be expanded in a second phase of construction that would allow for the export of more than 6 million tons per year. The Port of Beaumont, which will be the loading center, has been making more than $65 million in capital improvements to support expanded cargo operations, including $28 million for new rail infrastructure that will be composed of a new interchange yard and loop track.
In May, Enterprise Products Partners said it was expanding its south Texas pipeline and storage network to better accommodate fuel exports, including the loading of Panamax tankers at Beaumont and Aframax vessels on the Houston Ship Channel. Enterprise wants to be able to accommodate up to 11 very large gas carriers (VLGCs) per month on the Gulf as LPG export volumes swell. Much of the gas will be going to Mexico and the Netherlands but Japan is also viewed as a potential customer as it seeks to diversify supplies it already receives from the Middle East.

Houston Boxes
The Gulf coast’s biggest container port, the Port of Houston, has been gearing up for more box traffic once the Panama Canal expansion project is completed in 2015. This past May, Houston ordered four super-post-Panamax ship-to-shore (STS) cranes and three rubber-tire gantry (RTGs) units from Finland’s Konecranes in a deal worth approximately $56 million.

The electric-powered STS cranes, to be the largest Konecranes has ever built, will have a lifting capacity of 66 tons and will be able to span 22 boxes across. To be semi-automated, they will also include such technical features as a Ship Profiling System (SPS), a Trim/List/Skew system and LED lights for improved eco-efficiency. The lifting machines will be shipped to the port’s Barbours Cut Terminal in late 2014 and brought on line at Wharf No. 1 during the first quarter of 2015.

The Barbours Cut facility has grown rapidly since opening in 1977 to become one of the premier box-handling facilities on the Gulf. Further development plans are expected to see at least $700 million spent to modernize and expand both its berths and equipment. The three RTGs will be delivered to Houston’s Bayport Terminal, opened in 2007 as the port’s second container facility, by the spring of next year and represent an amendment to an earlier contact with Konecranes to provide eight RTGs to the Barbours Cut terminal. Konecranes delivered its first RTGs to Houston in 2003 and at present the port has nearly 50 Konecranes RTGs in its fleet.

Houston Breakbulk
In the breakbulk sector, Houston-based heavylift specialist Intermarine has concluded the sale-and-leaseback of a breakbulk and project cargo handling terminal on the Houston Ship Channel from an affiliate of Lexington Realty Trust. The 25-year contract includes three ten-year renewal options. Lexington said the average rent during the lease period would be approximately 8.3 percent of the terminal’s purchase price of nearly $82 million. The sale/lease deal follows Intermarine’s decision to build a new operations center on the main shipping channel at Houston close to the 95-acre terminal it will be leasing.

The new building will house the shipowner’s entire technical, operations and traffic teams. “This new operations center will enable us to continue our plan of growth and expansion, but more importantly it gets all of our operations, technical and traffic teams together in one location,” said company CEO Al Stanley. The leased terminal has 2,055 feet of berthing for deepsea ships as well as a 1,500-foot-long barge facility. This will allow it to safely berth two of Intermarine’s largest heavylift vessels at the same time while handling transshipment cargo to and from ports along the intercoastal waterway.

Corpus Christi
In West Texas, the Port of Corpus Christi has found itself riding a sudden oil boom, with crude shipments jumping from zero to 340,000 barrels per day over the past two years as petroleum flows from the Eagle Ford Shale formation. New docks, pipeworks and crude oil storage tanks are being constructed at various locations around the port to accommodate the flow. These include two new docks designed to load up to six 30,000-barrel capacity barges simultaneously and two larger facilities designed to support tankers of up to 500,000-barrel capacity. In addition, the port’s Trafigura Terminal is being expanded to allow it to handle three medium-range tankers and two inland barges simultaneously.

Most of the crude being loaded is moving to regional refineries in Morgan City, Houston, Beaumont and Texas City. Beyond the Eagle Ford crude, the port has secured a major partner for its La Quinta Trade Gateway development (see Pacific Maritime Magazine, Sept. 2012), which is a multi-cargo facility being development on the La Quinta Channel. Austria-based international steel conglomerate Voestalpine announced earlier this year that it will lease part of the facility as the site for its new US direct-reduction steel plant, making it the anchor tenant for La Quinta.

The deal is subject to the successful completion and execution of agreements with various regional government partners but Mike Carrell, chairman of the Port Corpus Christi Commission, said the European company is a good fit for La Quinta. ”Voestalpine is a major international player in the steel-making and processing industry with a very strong focus on the environment,” he noted, adding that the proposed direct-reduction plant will provide both import and export cargos for Corpus Christi. When completed, the mill will produce high quality DRI and HBI (“sponge iron”) from iron ore pellets, with Altos Hornos de Mexico, a high-quality steel manufacturer south of the border, already signing up to purchase HBI from the facility.

DRI and HBI are comparable to the highest quality scrap or pig iron, and therefore are an excellent pre-material for the production of crude steel. In contrast to using pure coke-based blast furnaces, the planned direct-reduction plant will exclusively use environmentally friendly natural gas as the reducing agent. Additionally, cutting edge environmental control technology will be implemented in order to ensure a low emission iron reduction process. Voestalpine’s total investment in the complex is projected to run at about $700 million, with the plant due to come in line by 2016.