Tuesday, May 27 2014
By Kurt NagleBio: About the Author: American Association of Port Authorities (AAPA) President/CEO Kurt Nagle has a master’s degree in eco- nomics and over 30 years experience in Washington, DC, related to seaports and international trade. Prior to joining AAPA in 1985, he was Director of International Trade for the National Coal Association and Assistant Secretary for the Coal Exporters Association.Founded in 1912, the American Association of Port Authorities is a trade association representing more than 150 public port authorities in the United States, Canada, the Caribbean and Latin America. In addition to ports, Association members include more than 335 sustain- ing and associate members representing firms and individuals with an interest in the seaports of the Western Hemisphere. For more information, call Aaron Ellis at (703) 684-5700. ---------------------------------------------------Busy workers. Big ships. Cargo movement. Massive equipment. These are the hallmarks of a typical seaport. The energy that fuels this endless motion is, quite literally, a seaport’s lynchpin. New energy policies, projects and cargoes offer great opportunities to ports for revenue enhancement, business development and expansion.Even though fossil fuels remain the largest source of energy products in use today, “alternative” energy products—both as a fuel and as a cargo—are the fastest growing. As the world looks to renewable energy sources and as western nations seek to establish energy independence from more volatile parts of the world, seaports are seizing opportunities to carve out niche business lines and lead by example, both in the power sources they choose and in the ways that they partner with and support alternative energy companies.As a result, seaports are helping fuel energy change. For some ports, this means adopting policies that commit them to working with tenants, customers, local power companies and others to ensure the resiliency and security of grid infrastructure. For others, this means committing to green power sources or energy efficiency and conservation. Many ports are also staking their position in the emerging world of wind and solar power – either as a port that specializes in importing and/or exporting of the energy generation components, or by utilizing port land as a source of power generation.Liquefied natural gas, or LNG, has the potential to transform transportation fuel markets – in marine, truck and rail applications. Ports are sorting out their role with this emerging energy source, both in terms of providing bunkering facilities for vessels and serving as locations for import or export terminals. As regulatory bodies, the public, fleet owners and natural gas suppliers seek to understand the potential opportunities around LNG, ports will have a critical role to play.Ports Adopting New Energy Policies The issue of energy is one that cuts across port management roles and departments. Energy efficiency and cost savings is a topic that piques the interest of financial officers and operations managers, while green energy sources are a focus of port environmental managers. When it comes to the topic of energy reliability, risk managers and engineers may be driving the discussion. As more cargo-handling equipment and vessels utilize aging land-based electricity delivery systems, the idea of energy security and grid infrastructure become timely considerations of the executive team. And for any port that has had the misfortune of staring down a post-natural disaster recovery, the issue of energy is one of the most pressing that must be addressed to get facilities back on line and resume port operations.With these ideas in mind, ports are adopting energy policies that attempt to address and align the various and diverse aspects of an increasingly complex issue. In southern California, the ports of Long Beach and Los Angeles have developed comprehensive policies that attempt to position themselves and their customers on solid ground related to energy use, efficiency, infrastructure, reliability and resiliency. Throughout the Western Hemisphere, ports such as the Port of Seattle, the Port Authority of New York and New Jersey and Canada’s Hamilton Port Authority are showing leadership related to energy efficiency and conservation. And ports elsewhere are undertaking energy-related projects aimed at increasing their renewable portfolio and positioning their organization for long- term growth and sustainability.Fossil Fuel and Alternative Energy Projects AboundPorts with large energy-related portfolios may include facilities that receive, refine and/or distribute commodities such as petroleum, natural gas, LNG and coal.Currently, Saint John, New Brunswick, is home to the only LNG terminal in Canada, while the U.S. has 11 such terminals, half of which are located along the Gulf Coast. The others are along the East Coast, in Alaska and Puerto Rico. In terms of new undertakings, Veresen Inc.’s Jordan Cove LNG project in Coos Bay, Ore., received approval from the Department of Energy in March to export gas to importers in Asia. Another Pacific Northwest project, known as Oregon LNG, is expected to receive similar approval this summer. These two developments, both of which still need construction permits, would be the first of their kind on the continental U.S. West Coast and represent a potentially new era for the United States, where a drilling boom has pushed output to record highs. The outcome of these projects could also set the standard for other energy developments in the region. While numerous East and Gulf Coast ports have legacy petroleum and coal handling terminals, mining and shipping industries in recent years have looked to move coal and crude oil through ports in the Pacific Northwest to reach Asian markets. Meanwhile, seaports around the country that help quench the nation’s thirst for gasoline, diesel, aviation fuel and other petroleum products are busy building and/or modernizing their petroleum handling facilities. A good example is the Tampa Port Authority, which in October announced development of a new $56 million petroleum terminal complex that will keep the region's cars and planes fueled for decades to come.Paul Anderson, Port Tampa Bay’s CEO, said the port is splitting the cost of this “one-of-a-kind facility” with the Florida Department of Transportation, which he said will “bring sustainability to the region and the state for generations.”The volume of oil shipped by rail is booming. About 10 percent of U.S. oil production now depends on rail transport, equating to about 400,000 carloads per year. One project to handle this burgeoning oil movement is a new $46 million terminal at the Port of Beaumont, in Texas. That terminal, which opened in December, is unique in that it has the ability to receive full unit trains of crude oil from three Class 1 railroads, all of which serve the developing oil shale production areas in North America. Also unique is the terminal's design, with 120 unloading stations which allows all 120 rail cars to be unloaded at one time.Beyond fossil-fuel energy types, a number of North American ports are exploring or have already invested in varying aspects of solar and wind-power businesses.On the solar power front, examples include Oregon’s Port of Portland, which has partnered with Nike and Delta Airlines to install solar panels on the canopy of Portland International Airport to supply 100 percent of the Portland Nike Store's needs. In California, the Port of Long Beach has installed 71,500 square feet of solar panels on the roof of its World Cruise Center, which has the electrical generation capacity of 1.2 megawatt hours. The five- year plan is to install a total generation capacity there of 10 megawatt hours… enough to power a large cruise ship.Alternatively, wind-power provides niche opportunities for ports in three distinct business lines: on-port wind farm operations; servicing offshore wind installations (currently being explored by East Coast ports such as in Davisville (RI) and New Bedford (Mass.); and project cargo throughput for the development of nearby or distant wind-energy projects.Due to the scale of wind-energy components, ports must often make infrastructure investments, partner with inland modes to ensure clearance, specially train labor in suitable handling techniques and develop innovative handling solutions. Texas’ Port Corpus Christi, with five wind turbines operating at its port, is within 100 miles of three very large wind farms, each with more than 100 turbines. The port’s wind turbine cargoes originally moved by truck, but improvements and competitive rates are shifting the business to rail. Further up the Texas coast, the Port of Galveston handles inbound and outbound wind turbine components by vessel, rail and truck. According to Port Director Mike Mierzwa, handling wind turbine components offers good returns on several levels, such as providing revenue diversification and creating a lot of labor hours for longshore workers who unload and load the visiting ships.Energy Change is HappeningFrom coast to coast at seaports large and small, one thing is certain – energy change is happening. Like the seaports at the crux of shifting and emerging markets and new policy commitments, energy change is a blur of perpetual motion. The only constant is the certainty of its movement and activity.Not only does handling energy components and commodities create jobs and spur economic development opportunities for ports involved in this trade, the implementation of energy policies helps ensure port authorities have the ability to develop and maintain energy-efficient operations and facilities that save them money and minimize their environmental impacts, or “footprint.”As the hemisphere’s largest trade association representing more than 130 port authorities and hundreds more businesses and organizations that provide goods and services to ports, AAPA is excited to see the role that ports are playing in these emerging energy areas and how this activity will beneficially transform the port industry for the future.