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ALTERNATIVE ENERGY Grinding out New Cargo Opportunities BY LORI MUSSER
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rain might feed the world, but it has always been a predominantly bulk business and hasn’t fed into the global breakbulk and project cargo industries in big way. That might be changing, as new grain-related project cargoes emerge riding the coattails of record global grain production and a billion-gallon increase in global grain ethanol production last year. In October, the U.S. Department of Agriculture released its Grain: World Markets and Trade 2016/2017 outlook, projecting that U.S. and global wheat, rice and
corn production will set records. Moreover, according to the U.S. Energy Information Administration’s U.S. Fuel Ethanol Plant Production Capacity report released in June 2016, U.S. ethanol plant capacity has increased for the third consecutive year. America is home to almost 200 ethanol plants that offer up 15 billion gallons of nameplate capacity, the volume of denatured fuel ethanol that can be produced during the year under normal operating conditions. This figure is up a half-billion gallons over the prior year. U.S. capacity represents more than half of global production capacity, which increased by 1.13 billion gallons last year, according to the Renewable Fuels Association.
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DIVERSE BUSINESS
The potential stream of ethanolrelated project cargo is diverse. First, the production plants require a plethora of large-scale equipment – pumps, milling equipment, driers, turbines, generators, tanks, distillery components, and so on. Second, because most ethanol is used as a gasoline additive, there is affiliated distribution, storage and blending infrastructure. Third, clean energy technologies and regulations vary between countries and regions, and continue to change, requiring infrastructure updates. As economies introduce ethanol into their gasoline mix, or alter the ratio, new distribution equipment is sometimes needed. Geoff Cooper, senior vice president of the Renewable Fuels Association, documented the infrastructure components subject to change: new railcars, new
Saskatchewan-based Viterra reopened its Pacific Terminal at Port of Vancouver last month. In May, multipurpose heavylift operator AAL delivered Chinese-built components for a grain ship loader, conveyor and tower for transferring product. Credit: Viterra
tank barges, new tank trucks, new and retrofitted storage tanks and blending equipment at petroleum terminals, unit train receiving infrastructure, manifest rail receipt facilities, and marine terminal infrastructure. As with other energy-related infrastructure, ethanol plants offer project cargo potential during construction. There are also ongoing opportunities that persist long after start-up. Evolving technologies and dynamic expectations are especially prevalent in this sector. Projects underway, such as the Iowa-based Summit Agricultural Group’s US$115-million project developing Brazil’s first corn ethanol plant,
Ener-Core Inc. delivered two 2-megawatt power oxidizers to the Stockton biorefinery site owned by Pacific Ethanol. Credit: Ener-Core
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are expected to generate project cargo opportunities for a number of years. Examples of ongoing upgrades abound. In September 2016, for example, Pacific Ethanol Inc. announced installation of a 5-megawatt solar photovoltaic power system designed and built by Borrego Solar Systems for Pacific Ethanol’s Madera, California plant. The solar PV system is expected to reduce operating costs and improve its carbon score. In another example, in March, ICM contracted with The Andersons Albion Ethanol LLC to design and build an expansion to the Albion, Michigan, dry-mill ethanol location, doubling the facility’s capacity. The plant was originally engineered for future expansion. And, in late October 2016, Ener-Core Inc., a developer of gas conversion technologies for industry, delivered two of its 2-megawatt power oxidizers to the Stockton biorefinery site owned by Pacific Ethanol. Industry experts suggest ethanol capacity, especially cellulosic capacity, in the U.S. and worldwide will continue to expand. Numerous cellulose-fed plants are commissioned or have begun production in the U.S., including Abengoa’s facility in Hugoton, Kansas; DuPont’s biorefinery in Nevada, Iowa; and POET-DSM’s plant which opened in September in Emmetsburg, Iowa.
GRAIN OPPORTUNITIES
There are also several existing breakbulk trades in grain. Traditional bagged and palletized shipments to developing countries and remote markets persist, for now, according to Daniel B. Loughney, trade and business development director with the Port of Lake Charles, Louisiana. And there are finite but respectable markets for grain shipments moved in Gaylord bins, or in the proliferant super sacks and similar packaging. The Port of Portland, for one, has a robust bulk grain business. There are three elevators in Portland harbor, contributing to its ranking as the top U.S. wheat port. Sebastian Degens, director ISSUE 6 / 2016
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of marine marketing for the Port of Portland, said there has been a mini-grain infrastructure boom, with investments totaling US$500 million, by all seven terminal operators on both sides of Columbia River. Triggered by the deepening of the main port channel in 2010 from 40 to 43 feet, every grain operator has upgraded shiploaders, belts, and storage capability. Much of the project cargo destined for the grain terminals went unseen by public docks. Degens said some arrived by rail from domestic fabricators and were delivered right to the elevator site. “Because the elevators are on the water, what project cargo there was moved direct to terminal,” he added.
advancements are revolutionizing nutrient delivery. “The industry has changed. It is now possible to fit all the nutrients a person needs into a squeeze pack.” Lake Charles is the 11th-largest U.S. port by tonnage, moving bulk, breakbulk and other general cargoes. It boasts two general cargo facilities for breakbulk and project cargo. Those terminals are short-line rail served, offer 1.6 million square feet of covered storage, and can dock 12 ships simultaneously. In a unique twist, the Intracoastal Waterway bisects the port’s ship channel, enabling freight access as far north as Canada by barge. While it was once a world-class rice port – the surrounding Parish of Cal-
Other trends include customer concerns and requirements related to environmental issues, downtime, and a preference for a single contractor. There has been a bevy of recent elevator and mill announcements. For example, on Sept. 28, Minneapolis-based Miller Milling Co. announced a production expansion at its Saginaw, Texas, flour mill to 24,000 hundred-weights. The project will entail necessary infrastructure for grain handling, packaging, storage and load-out capabilities. At the end of October, Viterra Pacific unveiled a US$100 million investment in its Pacific Terminal at the Port of Vancouver, Canada. The terminal can now accommodate more than 6 million tons annually, tripling its Around the world there is a steady stream of previous capacity. Improvements included a shiploader, new bulk milestone deliveries of grain hoppers, conveyors weighers, upgrades to shipping conveyors and rotary cleaners, and shiploaders for elevators or terminals. and improved electrical and dust control systems. casieu produced two-thirds of all rice And on Nov. 1, Archer Daniels MidFor Portland, the grain infrastructure grown in the U.S. in 1926 – the Port of land Co. announced plans to build a new, improvements are already paying diviLake Charles is today an important bulk modern feed facility to replace its curdends. Between 2015 and 2016, Columbia energy port. rent operations in Quincy, Illinois. The River total grain volumes were up about For Loughney, project cargo shipcompany also has a new plant in Glencoe, 23 percent for wheat, soybeans and corn, ments are a happy offshoot to US$102 Minnesota, new facilities in China, and a according to Port of Portland statistics. billion in announced natural gas and facility under construction in Effingham, related infrastructure investments in the Illinois. FOOD FOR PEACE region. In the ramp-up to the natural gas Some of the hot dialogues in mill At the Gulf Coast Port of Lake build-out, the port has offloaded several and elevator infrastructure are about Charles, Loughney talked about an over-dimensional heavy-lift deconfacilities such as grain silos being built unusual grain-related breakbulk niche structed cranes. Loughney added that for seismic, wind or snow loads, silos business: U.S. P.L. 480 cargo – the U.S. project cargo for grain-related industry with high grade galvanization, and Agency for International Development’s is far from commonplace, but has been high-capacity silos and handling equip“food for peace” program. handled at the port. ment. There is also continued interest P.L. 480 is distributed primarin energy efficiency. Any upgrade or ily to third-world countries as bagged expansion to an existing facility presents cargo. Loughney said that the U.S. PORT INFRASTRUCTURE an additional opportunity to the global donates more food aid than the rest of Around the world there is a steady project cargo industry. the world combined, a fact borne out by stream of milestone deliveries of grain Almost every grain terminal, elevator International Grains Council Food Aid hoppers, conveyors and shiploaders for or mill, and every grain ethanol producCommittee statistics, which also lists the elevators or terminals, and similar infration project or expansion, will generate European Union, Canada, and Australia structure for mills. project cargo opportunity that includes as important donors. In an overview, published in Sepover-dimensional, overweight or other Loughney said the U.S. government tember, of its most recent survey of critical infrastructure components. purchases food from American farmship loader and unloader manufacturWhile the niches for ports, carriers, ers through a competitive process, and ers, World Grain concluded that large 3PLs and other logistics providers may exports the mostly bagged/palletized capacity equipment will enjoy greater be somewhat esoteric, they will remain product through select U.S. ports. He demand in coming years, to help deliver solid during this growth period for grain has seen these cargo levels fall off in economies of scale. It said there is an and ethanol production. BB recent years, with volumes now runespecially active equipment demand in ning at about 120,000 tons per year, with South America and greater Asia, with Lake Charles’ share of the lift closing in emphasis on Brazil and China, where on 25 percent. Cautious about the profacilities are needed to accommodate Based in the U.S., Lori Musser is a veteran gram’s future, he said that technological increased grain production. shipping industry writer.
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ISSUE 6 / 2016