Bulk and Breakbulk Report: Questions of Crude and Coal
After years of expansion in the container sector investment is now turning to the handling of bulk and breakbulk cargoes along the Pacific Coast, particularly coal and oil. Three coal terminal development projects at Grays Harbor, Coos Bay and Port Westward have collapsed but other facilities are still in the works for the Columbia River and Puget Sound. These areas have also drawn the interest of investors hoping to cash in on the shale oil boom, with new crude transshipment facilities planned at Grays Harbor and Vancouver USA. In British Columbia, wood pellet exports are seeing an obsolete grain pier undergoing modernization at Prince Rupert where coal export facilities are also being expanded.
Near the US border, the Westshore Terminal at Vancouver has expanded its coal exports following repairs to one of its loading berths damaged last year. At the same time nearby Fraser Surrey Docks has been studying the possibility of transshipping coal from rail to barge with the product then exported overseas from Texada Island. In Southern California, the Port of Long Beach has already seen its first shipment of iron ore exported and is now studying the construction of a new facility that would be used to transfer bulk grain from rail cars to ocean containers for export.
Several ports are expanding their auto terminals while others are investing in new equipment to handle breakbulk and project cargoes. This includes California’s Port of Hueneme and Washington’s Port of Longview where new high-capacity mobile Harbor cranes have been installed. Regional railroads are also modernizing their networks and rolling stock fleets to handle a higher volume of cargo.
More Capacity at Prince Rupert
In northern British Columbia, where a number of projects are being contemplated for both liquid and dry bulk exports, work has started on the C$90 million Port of Prince Rupert Road Rail and Utility Corridor project, which has a first-phase completion target of December next year. Work involves the construction of additional railway tracks for car storage and switching as well as a new dedicated two-lane highway for port-generated truck traffic. The corridor will also see a port-owned power distribution system built to serve a number of proposed bulk and liquefied natural gas (LNG) terminals that are expected to be built over the next decade.
The corridor project is being funded jointly by the governments of Canada and British Columbia as well as the Canadian National railway and the local port authority. Separately, Spectra Energy has been selected to build an 850-kilometer pipeline from near Fort St. John, BC to Prince Rupert’s Ridley Island that would handle LNG flowing to a terminal on the island being proposed by Prince Rupert LNG Limited. The facility would include a natural gas liquefaction plant as well as the associated infrastructure required to export the LNG to international markets.
According to company officials, the LNG facility would be developed in two phases, eventually reaching a nominal capacity of up to 21 million tons per annum.
Building on Ridley Island
Located just to the south of the City of Prince Rupert, and already the site of major terminals handling both coal and grain, Ridley Island is expected to see considerable development over the next decade. The island’s main facility, Ridley Terminals, is currently in the middle of a C$200 million multi-phase expansion project designed to increase its coal shipping capacity from 12 million tons to 24 million tons annually. This has seen the acquisition of two new car dumper barrels and a third stacker/reclaimer as well as the clearing of 44 acres of additional land for storage purposes. That land is now being integrated into the terminal’s existing operation through the expansion of conveyor systems and rail infrastructure.
By the end of this year a new tandem rotary dumper will be fully operational on the site and a new thaw shed erected. The expanded capacity is coming on line as global mining giant Anglo American breaks ground on a C$200-million expansion of its Trend coalmine, operated by Peace River Coal, in northeast BC. The first phase of construction will extend the mine’s life by 16 years and increase its output from 1.5 million tons per year of metallurgical coal to 2.5 million tons, most of which will be moved to Ridley Island by rail. Seamus French, who is CEO of Anglo American’s global metallurgical coal operations, said Anglo American is in the process of planning further expansions for the mine that would increase its output to four million tons per year and perhaps more.
While the market for metallurgical coal appears to be moving upwards the international potash market may be undergoing a change that could impact the future of Canpotex’s proposed potash export terminal on Ridley Island. For the past several years Canpotex has been contemplating the construction of a facility that, at full build-out, would be capable of exporting 13 million tons of potash annually. The proposed complex, to be sited on 55 hectares of land and 13.5 hectares of water, would consist of a deepwater marine wharf and access trestle along with a 120,000-ton capacity potash storage shed and conveyor system plus railcar unloaders. However, in August Russia’s OAO Uralkali announced its intention to pull out of the Belarusian Potash Company (BPC), which, along with Canpotex, controls approximately 70 percent of the world’s potash supply.
In the past, Uralkali and its former BPC partner, Belaruski, had withheld some of their production capacity to keep prices high. However, in announcing its intention to withdraw from BPC, Uralkali said it planned to begin selling its full production capacity of 13 million tons on the world market. This could cause a major drop in potash prices and cause Canpotex to rethink its proposed investment on Ridley Island. To date, representatives from the potash industry, including Canpotex parent companies Agrium, Potash Corporation of Saskatchewan and Mosaic, have cautioned against overreaction to the news, observing that this is not the first time the prospect of dissolving BPC has arisen. Nevertheless, while Canpotex received environmental approval for its proposed terminal last year, ground has yet to be broken.
Westview Wood Pellet Terminal
North of Ridley Island the old Westview grain terminal on Prince Rupert’s waterfront, decommissioned in the 1980s, is being redeveloped by Canada’s Pinnacle Renewable Energy Group to handle wood pellet exports at a cost of C$42 million. This past summer an agreement was reached with Metro Ports Canada Ltd, the Canadian arm of Metropolitan Stevedore of Wilmington, California, to manage the facility. When construction is finished the rebuilt terminal will be able to unload eight rail cars per hour, representing about 1,000 tons of pellets, and will have a storage capacity of 60,000 tons of the commodity in seven steel silos.
The reconditioned berth will be capable of accommodating Panamax-size vessels of up to 75,000-dwt and will be equipped with a shiploader rated at 2,000 tons per hour. Pinnacle owns and operates six pellet plants across British Columbia with a production capacity of well over a million tons annually and is currently examining the construction of an additional plant at Chase, BC that would be built at a cost of C$40 million. The major share of the production of these plants would be shipped to the Westview terminal by rail for onward movement to overseas markets.
At Vancouver, Westshore Terminals on Roberts Bank has completed repairs to its damaged Berth 1 loading trestle, which was cut by the bulk carrier Cape Apricot last year (see Pacific Maritime Magazine, Jan 2013). The trestle reconstruction, as well as the finalization of a major C$53 million expansion project, has allowed the two-berth facility to ship 8.2 million tons of coal in the second quarter, well up from the 6.1 million tons handled in the first quarter. About 60 percent of the total volume was metallurgical coal while 40 percent was thermal coal.
Denis Horgan, the terminal’s general manager, said that volumes were up mainly due to the expansion project, which boosted the terminal’s annual capacity from 28 million tons/year to 33 million tons/year. The project saw a second twin car dumper installed to speed unit train unloading while three new car positioners were added to the dumper station, including two exit positioners. The facility’s two oldest stacker-reclaimers were also upgraded and four of seven conveyor transfer stations were either redesigned or replaced. It is expected that full-year shipments from the facility will total between 28 and 30 million tons for 2013 compared with 26.1 million tons last year and 27 million tons in 2011.
Within Vancouver Harbor, Neptune Terminals is continuing to upgrade its multi-berth facility, which handles metallurgical coal as well as other dry bulks such as potash. After completing a number of rail enhancements to speed product flow last year the terminal installed a new mobile stacker/reclaimer earlier this year to replace an older, smaller unit. The new machine has increased handling capacity to 12.5 million tons per year and allows coal to be simultaneously moved from trains to stockpiles and from stockpiles onto vessels. Other recent upgrades include an automated electric railcar indexer and three ultra-low-emission, low-noise locomotives to move railcars within the terminal. Neptune is also nearing completion of a new indoor storage facility that will allow it to import phosphate rock for transportation to other parts of the country. In addition, the terminal has recently received approval from Port Metro Vancouver to build a second fully enclosed railcar dumper and additional conveyors as well as install a new shiploader. The longer boom on the new loader will allow ships to be loaded without the need to continually reposition along the berth to serve all cargo holds.
To support the additional machinery the terminal’s power system has been upgraded to improve electrical delivery as well as reliability. Once all investments are completed, the facility’s steelmaking coal capacity will increase to approximately 18 million metric tons per year – an increase of about six million metric tons – and result in about one additional unit train per day and one additional ship per week.
South of the border the development of new bulk handling facilities at US ports has been moving much slower. Proposals to build coal export facilities at Grays Harbor, Washington, and Coos Bay and Port Westward, Oregon have now been dropped but plans for Cherry Point, located in northern Puget Sound, and at three points along the Columbia River all remain in the permitting stages. Seattle-based terminal operator SSA Marine’s plan to develop a $500 million dry bulk terminal for coal, grain, potash, iron ore and calcined coke just south of Birch Bay remains in limbo as a number of factions have their say regarding its perceived advantages and disadvantages. A 121-day public comment period last year drew about 125,000 comments and this year Washington State decided to include greenhouse gas emissions and train traffic concerns in its review.
Being pushed forward by Pacific International Terminals, an SSA Marine subsidiary, the proposed Gateway Pacific Terminal has also run into strong opposition from the area’s Lummi Indian tribe, with representatives of the Lummi Nation stating their “unconditional and unequivocal opposition” to the terminal in a recent letter sent to the US Army Corps of Engineers. However, SSA Marine is hoping a compromise can be reached as it moves forward in the permitting process, and has agreed to pay $1.65 million to settle a lawsuit stemming from unauthorized land-clearing work accomplished on the site back in 2011. Nevertheless, it appears that its original plan of beginning construction of the facility this year, and having the three-berth terminal on line by 2015, is doubtful.
Coal on the Columbia
The two coal export terminals being planned for the Columbia River, with one to feature facilities in both Boardman and Port Westward, Oregon, have also encountered an increasing amount of local opposition, with the Oregon Department of Environmental Quality receiving a record 16,000 public comments on the Boardman terminal alone, roughly 80 percent of which opposed the project. Although opponents to the terminals had wanted the Corps of Engineers to “collectively” examine the potential environmental impacts of all three terminals together the Corps rejected that call in August and said it will only examine the projects individually.
Australia’s Ambre Energy is a principal in both projects. The first would see up to 8 million tons of coal moved annually from a rail-to-barge transshipment facility to be built at Boardman and offloaded onto bulk carriers using a floating Siwertell barge-to-ship unit to be positioned at Port Westward. The second project entails the construction of a much larger facility at the former Reynolds Metals site near Longview, Washington. This terminal, expected to cost nearly $650 million to fully develop, would have an annual throughput capacity of more than 48 million tons and would be capable of receiving as many as 16 unit trains per day while loading two Panamax-size ships simultaneously.
Earlier this year federal, state and county regulators selected a Virginia-based consultant, ICF International, to help prepare an environmental impact statement for the proposed Longview terminal. ICF will assist the Corps of Engineers, the Washington Department of Ecology and Cowlitz County officials to collect public comment on the project through mid-November. Public comment will again be taken on a draft of the environmental impact statement expected next year.
Crude Flowing West
In recent months the movement of domestically produced crude oil has quickly jumped ahead of coal as a potential growth commodity for US west coast ports, with Class I railroads originating a record 108,605 carloads of crude in the second quarter of this year, up 111 percent compared with the second-quarter of last year. Limited amounts of crude have already been moving out of the Global Partners-owned terminal on the Columbia River near Clatskanie, Oregon while unit trains have been moving additional crude to the Tesoro refinery at Anacortes, Washington and the US Oil and Refining facility at Tacoma, Washington.
Upstream from Clatskanie, Tesoro and Salt Lake City-based Savage Companies are moving forward in their plan to develop and operate a new crude transshipment center at the Port of Vancouver, Washington that would initially be capable of handling about 120,000 barrels of oil daily, with possible expansion boosting that figure to 280,000 barrels. The crude would be transshipped at Vancouver to ships or barges for movement to Tesoro’s refineries in California.
In western Washington, additional crude handling facilities have been proposed for development at Grays Harbor by Imperium Terminal Services; Westway Terminal Company, and U.S. Development Group. However, a $150 million oil facility proposed for construction at Tacoma, Washington by Targa Sound Terminal has been scrapped. Although no reason was given for the decision not to move forward with the project it is known that two refineries operated by Valero Energy in California are already making preparations to receive 100-car unit trains at soon-to-be-expanded unloading facilities located at Wilmington