Terminal velocity

Terminal velocity

The recent announcement by GT Logistics (GTL) that it had signed a marketing agreement with Cokinos Energy Corporation to enhance the services offered at its GT OmniPort in Port Arthur represents only the beginning for this major new player in the Southeast Texas petrochemical complex.

The 1,100-acre OmniPort scheduled to begin initial operations in April 2012 is a multi-modal terminal for crude oil and other products transported via rail, ship, barge and truck. Upon GTL’s completion of rail lines, crude railcar unloading racks, pipelines and barge loading facilities, Cokinos will be responsible for marketing and scheduling throughput of crude oil delivered to the GT OmniPort.

The old line that the three top factors in real estate are location, location and location is one of those clichés that is largely true, as the development of the OmniPort site demonstrates. The site is strategically located 85 miles east of Houston on Taylor Bayou adjacent to Port Arthur. Comprising 1,116 acres of prime available acreage inclusive of utilities, the site’s existing infrastructure is ideal for logistical-oriented industrial uses.

The site has superior direct passage to major transportation thoroughfares, including shipping gateways via the Port of Port Arthur, rail lines, air transportation and pipeline distribution systems. Its location provides immediate access to the world’s largest concentration of petrochemical, manufacturing and research facilities.

Bart Owens, vice-president and general manager for GT Logistics, reviewed the past, present and future of the site in an interview with the Business Journal.“This is a plant site – Coppers opened a refinery there in 1951. Then it became Sinclair Coppers and then it went through several names – Arco, Arco Polymers, EquiStar – and wound up as Lyondell. We acquired it from Lyondell in 2010,” he said. “The plant was idled in 1999, and Lyondell made the decision to raze the plant, take down the mechanical portion and remove it. When we bought it, we had the concrete foundations and underground piping to remove. We’re currently involved in an environmental cleanup of the site – we’re about 85 percent complete with that. TCEQ is monitoring and we have environmental engineers involved with all aspects of that, and it is approved for industrial redevelopment.”

Owens provided some insight into the company’s thinking about its new acquisition.

“We sat down and looked at what our best opportunity was (for the site). It was two-fold. One would be a logistics play; that is, a business that supports the regional petrochemical and refining industry in handling product via rail, barge and truck. It’s a unique piece of property that sits on the Union Pacific mainline; it sits on Taylor Bayou turnaround, which connects to the Intracoastal (Waterway) so there’s barge access; and then of course it sits on Highway 73 for truck access.”

Ocean-going vessels including ships and barges can also be accommodated thanks to another GTL acquisition nearby.

“We acquired a second tract on the ship channel that’s about two miles away that we intend to connect with pipe for liquids trans-loading to ship,” added Owens.

The project is already having a positive impact on the local employment picture. GT Logistics, which will operate the terminal itself, will employ an estimated 100 to 150 people in the next 12 to 16 months.

“We employ eight people right now; there are approximately another 100 construction jobs that have been in play since July of 2010. That’s going to jump up to probably 150 with a bunch of mechanical and electrical guys over the next three weeks, but we will probably employ 120 to 150 people with just the logistics business,” said Owens. While he declined to provide specific details of future plans, he suggested the best of OmniPort might be yet to come.

“We’re in negotiations now. The second part of the project will be an industrial development of the site, to subdivide and develop tracts with opportunities for people who are connected to petrochemical or refining industries. It’s a seven to 10 year development, so you could see thousands of jobs there,” he said.

One advantage to the GTL business plan is its flexibility to respond to market changes. Owens said they are responding to shifting circumstances ever since they acquired the property in 2010.

“I think you’ve seen crude by rail become such a huge, huge segment of our business model as opposed to when we started,” he observed. “A lot of that is attributed to tension in the Middle East and the problems with the Iranian government in the Straits of Hormuz; and you also see the restriction of pipeline access to these shale plays where there’s remote stranded crude oil that can move by rail.”

The production from numerous shale plays is heading this way. “You’ll see some Bakkin crude (from North Dakota) coming to Port Arthur; you’ll see some Eagle Ford, Permian basin, Niobrara from Colorado. Crude by rail is fixin’ to be huge in Port Arthur,” said Owens, suggesting much of it will pass through GT Omniport.

GTL’s current construction program includes the installation of over 10 miles of rail track with a loop track to handle two 103-car unit trains at its 1,100-acre site. Railcar unloading will be performed at an 18-spot rack system connected by pipeline to its two-barge dock on Taylor Bayou. Rail service to the site is provided by the Union Pacific Rail Road. GTL also owns and operates a 20-acre deepwater dock and receiving facility on the Sabine Neches Navigation District Channel with more than 900 feet of steel bulkhead improvements and 1,700 feet of waterfront access to the 42-foot-deep channel.

“The features and auxiliary facilities of the GT OmniPort terminal, including rail, barge, ship and pipeline improvements, will set new standards for customers, improve their logistics chain and reduce costs,” said DeSpain. “The completion of construction and this agreement with Cokinos positions GT OmniPort as one of the top receiving facilities of the crude-by-rail supply chain.”

Business Journal editor James Shannon offers a weekly column of business news for readers of The Examiner. For more details, see the editions of the Business journal published monthly in Beaumont, Port Arthur and Greater Orange. Check out the blog at setxbiz.blogspot.com or e-mail james [at] beaumontbusinessjournal [dot] com.