A Stranded Asset Turned Pellet Export Hotbed
The transformation of an abandoned marine terminal in Virginia shows why wood pellet production is an economic engine capable of driving growth in multiple continents. After a cargo port at the Virginia Port Authority’s Portsmouth Marine Terminal went idle in January 2011, the VPA began searching for a suitable replacement option that would create jobs at the site and stimulate the surrounding economic region. The VPA chose ecoFUELS Pellet Storage LLC, a joint venture between Capital Management International and Houston-based energy infrastructure developer, multiFUELS LP.
The joint venture now has a 20-year lease for a 15-acre site that will have two pellet storage domes operational by the second quarter of 2014. The combined storage capacity of the facility will total roughly 1.2 million tons. “We’ve got a facility which is a fabulous asset,” Peter O’Keefe, founder of CMI says. “It is a deep water port that is probably the most enviable site on the east coast to export pellets because of the deep water draft.”
O’Keefe says the response from European-based utilities has been strong and he is already well down the path to long-term purchase agreements, thanks in part to the assurance provided by the 20-year lease at the port. O’Keefe wants pellet producers In Virginia and the surrounding region who currently serve the domestic markets or those firms looking to enter the export market, to know that the facility is open for business for third party producers not affiliated with O’Keefe. “We want to talk to as many potential suppliers as possible,” he says. “We are very excited about that aspect of the business.”
The state of Virginia is excited about the economic ramifications of the revamped port as well. O’Keefe says the need for new jobs at the port, the transport jobs related to the trucks or railcars that will bring in the pellets, and the chance for pellet producers on the far west side of the state to receive a financial benefit, all helped the VPA to select its bid for the location. And, that says something about the biomass and wood pellet industry, he says. “It says something about the promise that it (biomass) holds for job creation in America. It says a lot about everyone’s belief in the economic engine of biomass export.”
As an example, he points to smaller operations in the region that could now ship 80,000 tons of products overseas and enter into the export market. “This gives them an outlet they didn’t have before,” he says. Fortunately, when O’Keefe refers to “them,” he could have been speaking about multiple groups: pellet producers, the VPA, job-seekers in the area or the European utilities in search of an efficient loading terminal to receive electricity production-bound pellets. All of them, no matter what continent they do business on, should be excited.