Mark Viator, Director of Government Affairs & Special Projects with with Jefferson Energy Companies recently updated the Jefferson County Commissioners Court about the company’s progress with the Jefferson Terminal. Viator was also interviewed by the Beaumont Business Journal. In the article Viator discussed the growing need for the terminal, the benefits of crude by rail, the capabilities the terminal will have once it is complete, and the positive economic benefits that the terminal and its construction are bringing to the local economy.
About the Jefferson Terminal
The Jefferson Terminal is situated on a 250 acre site along the east bank of the Neches River Ship Channel. It is an intermodal facility accessible by ship channel, rail, and interstate highway with plans in place to also connect the terminal to pipelines. It was conceived and developed with the objective of serving the Gulf Coast refining market, one of the United States’ largest and most active markets. The facility represents a cross-county effort with the project initially being funded with bonds from the Jefferson County Industrial Development Corporation yet with the terminal itself being built on Orange County property of the Port of Beaumont.
The Jefferson Terminal Fills a Growing Need
In his interview with the Beaumont Business Journal Mark Viator explained the technological advances responsible for the burgeoning US oil and gas industry:
“The United States has new technology in drilling that allows us to extract oil from what’s called shale oil basins. In the past we were not able to do that. It was done with traditional vertical drilling. Through the help of fracking as well as horizontal drilling, we’re able to extract more oil and gas from the shale basins. Some of the shale oil basins do not have pipelines readily available to transport that oil or it is too thick to transfer by pipeline.”
The Benefits of Oil by Rail
The increased production of oil and gas has in turn resulted in much more petroleum being shipped by rail. According to data from the U.S. Energy Information Administration’s website the volume of petroleum transported by rail reached 9 million barrels a day in November of 2014, a level it had not seen since July of 1986. Viator went on to explain the benefits of crude by rail:
“The rail has become a virtual pipeline of sorts,” Viator said. “Pipelines take a number of years to build and are very expensive. Crude by rail is more flexible — to be able to pick up the crude oil and bring it to destinations, it does not require 30-year contracts.”
Viator continued his comments focusing on the purity of crude by rail that is gained by avoiding the comingling that typically happens in pipelines:
“When you put crude in a pipeline, it can mix with other types of materials. Purity of product is another benefit of putting it in a rail car.”
Finally, the facility also has the advantage of being able to handle very heavy, thick crude oil from Canada called Bitumen. There are various types of Bitumen crude oil dependent upon how much dilution material is used to ship the heavy Canadian oil sands crude.
Phase 1 Stats about the Jefferson Terminal
- Deep water dock with rapid loading system to accommodate ocean-going tankers, ocean barges, a marine river barge dock capable of loading up to 120,000 barrels per day
- Metering units to accurately measure quantity of liquids moving through the system
- State-of-the-art railcar and barge dock vapor balancing system with vapor balancing and thermal oxidizer for emissions control
- 700,000 of storage tank capacity completed or under construction
- Direct service by three Class 1 rail carriers: Union Pacific, Kansas City Southern, and BNSF Railway.
- Six loop tracks capable of unloading up to 220,000 barrels of crude from rail tank cars per day
- Ladder tracks to accommodate 5-10 rail car unit trains.
- Sidings for staging and positioning out-of-service cars
- 3.6 million barrels of on-site storage capacity with blending capability in the future
- Ramp with direct access from Interstate 10 into the Terminal with truck loading/unloading stations to accommodate up to six tanker trucks per hour
- Pipeline connections to major hubs and terminals,
- Steam and heat facilities to unload and store bitumen and other heavy crudes.
A Public-Private Partnership The Jefferson Terminal also represents an ideal model of a private sector company working with a public governmental organization for the mutual benefit of the community. Chris Fisher, Port of Beaumont Director and CEO, explained it this way:
“I’m just excited about the opportunity that facility presents for our area to contribute to national security by participating in the effort to make us less dependent on foreign oil.”
“One thing that public ports look for nowadays in expanding their ports and the positive economic impacts they have on their community is public-private partnerships. The port can only do so much with its direct revenues. Of course, we try to minimize taxes and need some public support for our facilities, but public-private partnerships are very important to the growth of port in today’s competitive port environment. What we have with Jefferson is really the model of what a public-private partnership should be. Jefferson is a lessee of the port. The port is the lessor.”
“The public entity the Port of Beaumont has the land that is very suitable for rail, marine, and truck transportation. We built some basic infrastructure; we built a dock, a rail loop, and road access. We spent about $40 million from port revenues and grants to do the basic development. What we have now with our relationship with Jefferson Energy is we have a private partner that’s going to come in and fully develop that site, and work with the port to create jobs in the area.”
Supporting the Local Golden Triangle Economy
Viator confirms Fisher’s statements about a priority of the Jefferson project being to create jobs and support the local economy. According to Viator about 900 jobs have been created as a result of the project with well over half, 580, being local. Jefferson Energy has also made it a point to work with woman-owned businesses as well as to hire minorities whenever possible, thus providing even more support for important sectors of the economy.
One such local, woman-owned company is Cowboy Industrial, a pipe, valve and fitting supplier that has been supplying parts for the Jefferson Rail project. Amber Arcana, manager of the company, had this to say about Jefferson:
“The benefits of Jefferson choosing local companies can not truly be quantified. If Jefferson were to use companies outside of the Golden Triangle many suppliers, contractors, etc. would need to go elsewhere to find steady work, therein taking hard working citizens away from Southeast Texas. We have been able to hire new employees as a result of this local development. While we provide material, we also want to make sure that the project is taken care of sufficiently and efficiently. Many times small businesses get overlooked, but Jefferson has made certain this was not the case.”
This point was reiterated by Jerry Nelson, co-owner of Maverick International, an industrial oil field supply company based in Beaumont that has also been significantly involved in the Jefferson project. Nelson said:
“I’ve been in business for 39 years. This might be the first major project that I’ve seen in this area that is totally committed to spending their money local. They hired STI, which is doing all the engineering and construction. They are buying their materials from Maverick, Cowboy, and local supply houses. There is no guarantee that Maverick is going to get a supply order because there is local competition, but at least it is somebody locally. This project gives us the format to compete.”
DezTex Industrial Services has also been involved with project and its president, Lance Deshotel, cited this involvement as, “a large contributing factor to the success of (DezTex) in 2014” in a letter he wrote to Jefferson Energy Companies CEO Al Salazar. Deshotel added:
“We have successfully completed over seven hundred thousand dollars in work partnering with the STI Group since February.”
Jefferson Energies’ spirit of community involvement is perhaps best summed up in a statement from Viator about why hiring local workers and investing in the local economy is such a priority. Viator said:
“We live and work here too. We want Southeast Texas to be the best it can be from the standpoint of the education of our children and…we want our economy to grow and flourish.”
The initial phase of construction on the Jefferson Terminal is already complete and the second phase is underway and expected to be completed by the end of the year. The Jefferson Terminal truly represents a powerful opportunity for the Gulf Coast refining market and the residents of the Golden Triangle area.