Operation Diversification

Multi-highway accessible and a prime location for exports to Asia, the Port of Stockton has acreage ripe for development, 24-7 cargo availability, and wants pellet manufacturers to know it’s open for business.
By Anna Simet | October 01, 2018

Eighty-five years ago, in 1933, lumber vessel Daisy Gray arrived at California’s Port of Stockton. It was the first ship handled there, and ever since, forest products have been an important commodity to the port. For the past several years, port personnel—many with decades of experience—have been interested in adding another wood product to its cargo offerings: wood pellets. They are confident it has much to offer a manufacturer looking to site a facility there, particularly one with interest in shipping product to Asia.

On the San Joaquin River, the Port of Stockton is an inland facility in the extended Bay area, 75 nautical miles from the Golden Gate Bridge. The fourth largest port in California, it offers immediate access to three uncongested highways: I-5, CA-99 and CA-4, according to Pete Grossgart, sales and marketing manager. “We have tremendous access to I-5, which is the main northbound corridor on the West Coast that stretches from Mexico to Canada, and we are less than a mile from an off-ramp to I-5,” Grossgart says. “We have CA-99 a few miles away, we’re close to the Bay air field and an hour south of I-80, so we really have an excellent location.”

The port has spent almost $100 million on infrastructure upgrades over the past several years, according to Grossgart, including investments in docks, roads, rail, bridges and utilities. These improvements and expansion investments translate into millions of dollars in savings for new development projects, which there is ample room for. “The operating port is roughly 2,050 acres, and of that, we have about 600 available for development,” Grossgart says. “I believe we have more land available and ready for development than the rest of the ports in California combined. We’re in a really unique situation in that regard. In 2000, we were given Ruff and Ready Island, a former Navy supply depot, and that tripled the size of the operating port. And we have another 2,000 or so acres that haven’t been developed at all, other than dredge placement sites.”

The location and space would be ideal for a pellet manufacturing facility, says Grossgart, who has been exploring the idea since he joined the port a few years ago from Stevedore Co., and even before then, the port was watching the wood pellet export market.

In Pursuit of Pellets
When the financial collapse occurred a decade ago, it was a turning point for the Port of Stockton. “In the midst of the Great Recession, we discovered that one of the major components of our cargo base—construction materials like cement, lumber and steel—took a nose dive,” says Grossgart. “Cement, for example, went from 2.2 million tons in 2006, to zero—and I mean literally zero, in 2009.”

It was then that the decision was made to strategically diversify the port’s cargo base. “That decision has led to the pursuit of wood pellets—we’re very interested in finding markets that aren’t necessarily niche, but new markets to northern California,” Grossgart says. “With wood pellets, you need to be near the fiber basket, and we have that up in the mountains, with the die-off of the sugar pines and other conifers. We also have joint service facility service by both the UP and BNSF railroads, and the port has been refurbishing and adding rail steadily since 2001. We have a plan to further expand its rail capacity in the  the next few years.” further expand its rail capacity in the next few years.”

The port also happens to be a special district of the state of California. “This basically makes us our own little city,” Grossgart says. What that means is that the port sets the gate hours, and therefore, it never closes. “If you want to go to your facility, it’s secure, around the clock,” he says. You have to go through a gate, but it will never close. We’re open 24 hours, 365 days a year. We have land available near dock, so if someone sited a mill here, they could bring in their logs or chips, process them, and then convey their product to the dock, and it isn’t this immensely long run.”

The 15 berths the port boasts often ensures there is no waiting to load. “We have some that have very high utilization, but given the option, we would site something like this as close as possible to one of the berths with very low utilization, so there would be very little chance of a berth conflict,” Grossgart says.

He adds that the port’s shipping capabilities are a perfect fit with what Japan can handle. “At a conference we went to, we learned Japan can handle Handymaxes with 20,000 to 30,000 tons of pellets, and that’s it—it can’t handle full Panamaxes, and that’s what we see here. We have Panamaxes that can’t be filled all the way, and Handymaxes that we can fill. The limitations in Japan as to what they can handle in a shipment, it’s perfect for our port—it’s what we do.”

The port isn’t a stranger to biomass energy, as it is actually home to a biomass power plant. “It used to be a coal-fired plant, and about 10 years ago, Detriot Edison took the facility over and spent a tremendous amount of money converting it,” Grossgart says. “It’s a very cool, very clean and high-tech power facility, and we’re proud to have it here.”

There is also an abundant potential biomass feedstock in the region. California is home to more than 129 million dead and dying beetle-killed and drought-stricken trees. While San Joaquin County isn’t one of the 10 high-priority counties—counties that the state’s Tree Mortality Test Force has designated as having the highest number of dead trees—it does shares a border with two of them—Amado and Calaveras, which, according to an April update, are currently home to a collective 1.3 million-plus dead trees, compared to just 15,000 in 2010.

Over the past several years, Gov. Jerry Brown has issued several Emergency Proclamations focusing on the tree mortality crisis, and while no incorporation of pellet production initiatives, bioenergy has been an area of focus. The most recent proclamation, issued in May, emphasizes the urgency in expediting treatment activities, instructing the natural resources agency to double the statewide rate of forest treatments in five years to at least half a million acres per year. Among many other components, it instructs state agencies to reduce regulatory barriers to entry for forest health and fuels reduction projects, and boosts education and outreach to landowners and others interested in these projects.
Grossgart says the port hasn’t done an independent assessment on feedstock logistics, but has gathered intelligence from mill owners, foresters and other stakeholders. “We have had a lot of interest over the past two years, but the low value of the cargo hasn’t justified investment in the plant.”

And although wood pellet exports on the West Coast have been associated with a few hurdles, such as competing, Canadian ports specializing in wood pellet exports, and availability of low-cost residue from wood processing operations, Grossgart says biomass energy subsidies being provided by the Japanese government may be a game changer, and allow for a project to pencil out. “Stockton is almost in the geographical center of California, and we’re very well situated—geographically and with the road and rail connections—to be able to handle almost any requirement a mill might have.”

Coming off a record year in 2017—despite a highly competitive market—with overall cargo volume up by over 21 percent, an increase in the number of vessel calls by more than 10 percent, and revenue of $56 million, the port is confident it has much to offer to allow it to continue to expand and diversify its cargo base. “Hopefully, in 10 years, we’ll be full here and can expand into the next neighboring island,” Grossgart adds. “We have significant room to grow.”

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Port of Stockton Fast Facts
• Serviced by Stockton Deepwater Ship Channel with project depth of 35 feet of MLLW (mean lower low water)

• 15 berths to accommodate changing ship schedules and a multitude of cargoes; reinforced docks and lay down areas and cargo is handled by highly qualified labor

• Over 7 million square feet of warehouse space, with hundreds of acres of land available for future development

• Foreign Trade Zone includes facilities located throughout the Stockton; offers a variety of services, allowing more flexibility and diversity than any other zones

• Personnel with decades of experience—all port’s service directed by staff through one administrative complex

• Port publishes tariffs, stevedore’s cargoes, assigns berths, supervises cargo activity, provides shipping documentation, accounting and rate quotations

• Round-the-clock security, with 24/7 cargo availability, allowing tenants to schedule pickups and deliveries to meet specific schedules

• Two Liebherr 550 cranes to handle oversize cargo

• Two miles of on-dock rail

• Stevedores with appropriate gear

• Served by the UP and BNSF railroads

• Immediate access to uncongested highways; I-5, CA-99 and CA-4 are adjacent to port properties. I-580 is 30 minutes away and I-80 can be reached in an hour

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Author: Anna Simet
Editor, Pellet Mill Magazine
asimet@bbiinternational.com
701-738-4961