Pacific Maritime Magazine - Marine Business for the Operations Sector

By Jim Shaw 

Regional Report: The Columbia Gateway

 

The Port of Astoria, at the mouth of the Columbia, has been welcoming a growing number of cruise ships and log carriers, with 14 bulkers arriving to load logs last year and 18 cruise ships scheduled to call this year. Photo courtesy of Port of Astoria.

The Columbia River System has seen two major events take place over the past few months, the inauguration of the nation's largest floating drydock at the Portland Shipyard and the loss of virtually all of the Port of Portland's container traffic following the withdrawal of two major container carriers. To date, the drydock has been a huge success, lifting a number of government-owned ships, including the Maritime Commission's 55,355-ton displacement twins Algol and Capella and the hospital ship USNS Mercy, as well as Portland's first cruise vessel in more than a decade, Norwegian Cruise Line's 2,300 passenger Norwegian Star.

Just around the corner, however, the Port of Portland's Terminal 6 container facility stands virtually empty following the withdrawal of South Korea's Hanjin Shipping in February and then Germany's Hapag-Lloyd in March. Together the two carriers handled almost 100 percent of the Oregon port's container traffic.

Both shipping lines had suffered from labor unrest at Portland, where container crane productivity had fallen to an average of about 14 moves per hour, and apparently neither had the patience to continue. Fortunately, bulk traffic on the river is continuing to expand, although opposition remains from various groups concerning any plans to develop coal, oil or gas handling facilities.

In the vessel construction sector, yards along the Columbia and Willamette have been expanding as they become builders of much of the West Coast's tug and barge fleet.

Portland's Loss

The loss of Hanjin and Hapag-Lloyd at Portland is expected to have little impact on the port itself as boxes have accounted for only around 10 percent of its marine business over the years, with bulk commodities dominating. Dockworkers are also not expected to suffer as they can easily take their skills to other regional ports. However, farmers in the interior of Oregon, Washington and Idaho, who have come to expect relatively low barge-to-ship freight rates for their agricultural exports, will face higher tariffs for truck and rail use. The Port of Lewiston, Idaho, at the head of the Columbia-Snake River System, had already seen its container-on-barge traffic shrink dramatically over the past year and in April port manager David Doeringsfeld admitted that the upriver gateway was no longer shipping containers on water. Another entity that may have a difficult time is Portland's Terminal 6 operator, ICTSI Oregon, which has a long-term contract requiring it to pay the port $4.5 million per year regardless of how many containers it handles. Although ICTSI has said it is "committed" to seeking replacement customers for the 40-year-old box facility it admitted that attracting new lines will be difficult given the almost three years of work stoppages and slowdowns that have taken place.

Last year Portland saw 513 ships arrive and handled 12.9 million tons of cargo, including 164,931 TEUs of containers.

Vigor's Gain

While container ships have become a rare breed on the Columbia not so other types, particularly cruise ships and naval vessels which have been swarming in to take advantage of the nation's largest floating drydock now operational at the Portland Shipyard. Brought in from China by Vigor Industrial at a cost of $50 million last year, the 80,000 long ton capacity dock has recently hosted such ships as the 894-foot by 106-foot floating hospital USNS Mercy, the submarine tender USS Emory S. Land and the fleet oiler USNS Guadalupe. In March, repairs were accomplished on the 91.740-gt cruise ship Norwegian Star, the first time a cruise ship had been handled at Portland in more than a decade.

Not content with maintenance and repair work, Vigor's fabrication division has been building barges for some time, including two 83,000-bbl tank barges under construction for Seattle's Harley Marine Services. Earlier this year the yard delivered its first propelled newbuilding, the pushtug Crown Point, to Vancouver's Tidewater Barge Lines as the first of three sister tugs designed by CT Marine of Edgecomb, Maine.

Also building tugs at Portland is Diversified Marine, which recently delivered the 80-foot Michelle Sloan to Harley Marine and will turn over a sister tug, Lela Franco, to Harley later this year. Each of the Robert Allan-designed boats offers 5,200 HP and a bollard pull of 65 tons. A third Robert Allan-designed tug is under construction at Diversified for Brusco Tug & Barge and will also be delivered towards the end of the year.

Vancouver Crude

Across the river in Vancouver, Washington the JT Marine yard has delivered its third tug built for Hyak Maritime, the 6,000 HP Montana (see Pacific Maritime Magazine, April 2015), for operation by Foss Maritime, with the first two, Hawaii and Washington, already operating under charter to Crowley. There is an option for a fourth boat, Alaska, but a firm contract has yet to be signed.

Just downstream from the JT Marine facility, the City of Vancouver has decided to conduct a thorough environmental review of plans by San Antonio-based NuStar Energy LP to convert an existing bulk terminal at the Port of Vancouver into a facility that would be capable of receiving up to 22,000 barrels of crude oil per day brought in by train from the Dakotas.

This is the second rail-to-ship oil terminal proposed for construction at Vancouver, with a much larger

facility capable of receiving 280,000 barrels per day envisioned by Vancouver Energy, a joint venture of Tesoro Refining & Marketing Company LLC and Savage Companies. Vancouver is considered an ideal location for such a facility as it has 100 acres of land available at its Terminal 5 location after Australian mining giant BHP Billiton pulled out of a proposal to build a potash exporting facility on the site last year. In addition, the port is close to completing its $275 million West Vancouver Freight Access project, which will substantially reduce port rail congestion and give port customers better rail access.

Kalama Grain

Down river from Vancouver a $50 million expansion of the Temco grain terminal at the Port of Kalama, which has nearly doubled the facility's handling capacity to 200 million bushels annually, has been completed. Renovation work included a new vessel dock and loading equipment, new rail and barge receiving machinery and upgraded grain cleaners. Temco is the smaller of Kalama's two grain terminals and accounts for about 2.75 million tons of the port's normal 11 million tons of grain handled annually, the remainder of which is moved by the much larger and newer Kalama Export terminal. This facility was modernized at a cost of $36 million several years ago.

Port investment to support the Temco expansion included $7 million to install 3.6 miles of new railroad line while relocating 1.1 miles of existing track. This year, $660,000 is being spent to demolish an old pet food plant and clear land for the construction of a new laydown yard and railway spur to be used by the Burlington Northern Santa Fe (BNSF) railroad as it builds a third main line in the Kalama-Kelso rail corridor. BNSF will lease the laydown area for at least three years and will pay $95,000 a month during the first year, to cover the port's construction costs, after which it will pay $14,000 a month on a month-to-month lease basis in the second and third years.

When the railroad finishes its construction project, the laydown yard will be converted to a light-industrial area while the railroad spur will be available to serve future businesses at the port.

Northwest Innovation

As the Temco expansion is completed, and the BNSF project begins to ramp up, a much larger development is on the horizon for Kalama. Earlier this year the port rented its old administration building to Northwest Innovation Works (see Pacific Maritime Magazine, March 2015), which will use the structure as its headquarters while it moves ahead with plans to build a two-phase, $1.8 billion methanol plant in an existing industrial park owned by the port while a second, $1 billion facility will be built across the Columbia in an industrial park owned by Oregon's Port of St. Helens.

Both facilities would produce methanol from natural gas coming from the Dakotas, with the resulting product to be exported to Asia. To make room for the plant at Kalama the port plans to spend $6.32 million to build two new warehouses for resident steel coil importer Steelscape; a 7,500-square-foot building for paint and a larger 45,214-square-foot structure for coil storage. This will allow Steelscape's existing 37,150-square-foot warehouse to be turned over to Northwest Innovation.

Although the port will pay for construction of the two new warehouses for Steelscape it plans to recoup its costs by increasing Steelscape's rent over the remaining 17 years of the company's lease agreement. The port plans to accept bids on Steelscape's warehouse construction later this summer.

Longview Oil

While Kalama has swung the door open for methanol the nearby Port of Longview has closed it, at least for the time being, for propane and butane by deciding not to sign a lease agreement with Houston-based Haven Energy Terminals, a company that had proposed building a $300 million propane and butane export facility at the port (see Pacific Maritime Magazine, April 2015). However, next up may be a proposal by Houston-based Riverside Refining to develop a new low sulfur oil refinery at Longview that would refine and distribute Bakken crude coming in by rail. Little has been disclosed about the project but Riverside is known to be interested in establishing a refinery with a capacity of 30,000 barrels per day on the West Coast that would produce a mix of diesel, gasoline and jet fuel, primarily for regional distribution. That capacity would make it the smallest refinery in the Pacific Northwest but also the first new refinery to be built on the West Coast in 25 years. Its small size would require only about 10 unit trains per month but they would be joining a rapidly growing number of oil trains that are beginning to seek Pacific Coast gateways.

Although Riverside has been looking at a number of sites for its proposed refinery, Longview has emerged as a leading candidate because of its location and rail/river access, particularly after the port finished a $21 million dedicated rail corridor project in 2005 that allows unit train operation into the port without roadway blockage. This corridor is to be expanded over the coming year, with one more track and two 7,000-foot sidings to be added.

Last year, Longview saw 261 ships move 8,249,908 tons of cargo, the bulk of it grain taken on at the EGT elevator.

Rainier Tugs

The Port of Vancouver USA handled a record 6.6 million metric tons of cargo last year and reported a record $37.5 million in operating revenue, both figures substantially up from 2013. Photo courtesy of Port of Vancouver USA.

Across the river from Longview, at the Foss yard in Rainier, Oregon the first of three Arctic Class tugs being built for Foss Maritime has been completed, with the 221,000-pound bollard pull Michele Foss expected to see its first assignment on an oil field sealift from South Korea to the Alaskan Arctic this summer. Like its yet to be delivered sisters, the 132-foot by 41-foot Michele Foss is rated as ice class D0. This means the hull has been designed specifically for polar waters and is reinforced to maneuver in ice. Propulsion is provided by two Caterpillar C280-8 Tier 2 main engines generating a total of 7,268 HP and driving twin 126-inch diameter five-bladed, fixed-pitch propellers set in Nautican nozzles. Deck equipment includes Markey double drum TDSD-40 towing winches with a maximum brake holding capacity of 230 tons.

The ability of the small Rainier yard to deliver this type of vessel underscores the amount of building capacity now centered on the Columbia, with three other yards, Diversified Marine, Vigor Industrial and JT Marine, all completing three-boat series, while barge builder Gunderson at Portland has recently furnished Foss with a new barge for this year's Arctic sealift while building another 185,000-bbl. tank barge for Kirby Offshore Marine. Across the river at Portland, Vigor is finishing up two 83,000-bbl. tank barges for Seattle's Harley Marine Services, both to be delivered this year.

 
 

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