Maine’s ports increase business, and biofuel companies gear up for export opportunities

BY RAMONA DU HOUX

March 26th, 2013

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Searsport: Windmill parts are unloaded because of state and federal funds that improved the port’s infrastructure. Courtesy photo

According to data from the U.S. Census Bureau’s Foreign Trade Division, from 2000 through November 2010 Maine exports grew 56 percent. With the arrival of a new cargo shipping business to Portland, exports and imports are expected to increase.

“To have a major business come to the city and to all of a sudden open up markets to businesses throughout the region, in ways that we haven’t in the past, is what we worked for and hoped for,” said Portland Mayor Michael Brennan.

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Officials drive pillions for the port of Portland’s infrastructure improvements in ’09 federal grants and state bonds helped the project. Courtesy photo

Eimskip operates a fleet of 17 cargo ships in the North Atlantic and has begun to make port at the Portland International Marine Terminal every two weeks. Many small businesses can’t afford to fly their goods overseas, and some have been forced to ship out of Boston. Now they can ship right here to markets in eastern Canada and Europe. Eimskip’s import/export shipping service will open up markets to Maine businesses of all kinds.

“The real opportunity I see here is for Maine businesses,” said John Henshaw, executive director of the Maine Port Authority. “It will make shipping cost-effective and open up entirely new markets. There’s great opportunity for our seafood processors and agriculture sectors stemming from Eimskip’s leadership in refrigerated container logistics.”

If a small business only needs to ship a few pallets of goods or a lot of pallets, with Eimskip either are possible. The new availability of shipping a crate or two will encourage small business trade.

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Mack Point, in Searsport Maine. The deepwater port’s facilities have been enhanced with state, local and federal funds for bulk containers, storage, and to accommodate large ships. Courtesy photo

No other steamship line is servicing the area and hasn’t for decades. While Eimskip, an Icelandic company, considered other ports in New England, it ultimately decided to move its North American operations from Norfolk, Virginia to Portland, Maine because of recent waterfront infrastructure improvements, the city’s strong seafood and natural resource markets, and Portland’s proximity to European ports.

“We would have never come if it wasn’t for this terminal,” said Larus Isfeld, spokesman for Eimskip. His company expects to hire employees to support its Portland operations, and the new service may also create related jobs in trucking, railroads, and warehousing.

The announcement came after years of work by city officials, the Maine Port Authority, private companies, and state government. [Former] Governor John Baldacci’s three-port transportation strategy enhanced the capabilities of Maine’s three deepwater ports: Portland, Eastport, and Searsport. With voter-approved bond issues, these ports began capacity and infrastructure improvements; the Recovery Act then provided $14 million in additional funds. The funding also helped improve access to the pier and also improved cargo-handling capabilities.

Now companies like Eimskip can choose Maine over any other deepwater port to move goods and services.

“We initiated a three-port strategy based upon these veins of economic development and traffic. We used the three major natural transportation routes that run through our 17 million acres of forestlands for our three-port strategy. The first in Northern Maine is serviced by Eastport. The second is the Millinocket–Katahdin region [serviced by] Searsport, and the third is Portland,” said Governor John Baldacci. “We’re perfectly situated for import and export opportunities. Maine is the portal to North America. In order to ship goods to North America from Europe, Maine is the most convenient entryway. Our ports are busy but not as congested as those in states to our south, and our workers are second to none. Now with the infrastructure improvements we have made, it’s heartening to see that we are attracting international business.”

Searsport has recently undergone a major reconstruction effort. The port received $7 million from the Recovery Act along with bond funding from the state for investments in a heavy-lift mobile harbor crane and cargo-handling equipment, which has increased import and export activities.

“Maine Port Authority’s willingness to support infrastructure improvements in our deepwater ports has allowed us to diversify into new product lines, including wind and biofuels,” said Jim Therriault, vice president of marketing and materials handling for Sprague Energy.

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Eastport, Maine, is looking forward to more companies using the port that has been enhanced with infrastructure improvements. In 2014 wood pellets will be added to their long list of exports being shipped.

Searsport principally imports liquid fuel and energy components. Ships laden with millions of barrels of petroleum and liquid bulk goods, road salt, gypsum rock, windmill components, and petroleum coke docked in Searsport’s last year.

“You can bring containers into Searsport where the Montreal, Maine and Atlantic Railway meets and double-stack the containers, one on top of the other, and ship them all the way to Montreal. Containers could be shipped directly to Chicago and then on to the West Coast,” said David Cole, former Maine Department of Transportation commissioner, in a previous Maine Insight’s article. Cole helped integrate the changes to Maine’s ports as part of the three-port strategy.

In addition, the Baldacci administration worked with train companies to extend rail services, hoping to move more goods shipped by rail and take more trucks off the roads, as the return for companies that ship by rail is greater than those that have to rely on trucks. One ton of goods can be shipped 500 miles on a gallon of diesel; by truck, it would take 83 gallons of diesel.

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train on its way to tWaterville’s intermodel facility has been enhanced. Photo by Ramona du Houx

Pan Am Railways is one such company that worked in partnership with the state. They helped bring the Amtrak Downeaster to Brunswick, as the company owns the tracks the train uses. In addition, improvements to Waterville’s intermodal transportation facility were made, in part, with the partnership of Pan Am Railways.

Eimskip will partner with Pan Am Railways to offer cost-competitive access to North American markets.

“We are very excited to be working so closely with Pan Am [Railways]through Portland, Maine,” said Eimskip CEO Gylfi Sigfússon. “Pan Am has been very helpful working with us to make this possible, and we believe that our work together is critical for success moving forward.”

The potential of exporting wood biofuel energy products—

In 2007 the Baldacci Administration began to encourage and highlight the potential of wood pellets as a homegrown sustainable energy source, so residents and businesses would diminish their use of oil, save funds, and help Maine’s economy at home and with exporting the commodity.

“Maine’s natural resources have always been the bedrock of our economic growth. New innovative processes are helping to transition traditional industries for a new era, adding value to our sustainable resources, which is key for our economic development. We once fueled our mills with energy from hydropower; now some mills are creating biofuels that are bringing energy costs down and growing good jobs in our rural communities,” said former Governor Baldacci.

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Pan Am Railroad’s CEO Peter Finch, and state officials with Governor John Baldcci in the center, cut the ribbon for rail improvements in Lewiston, which were partially funded by bonds. Photo by Ramona du Houx

All of Maine’s deepwater ports have been gearing up for the burgeoning market in exporting pellets.

“For the last several years, there’s been a good deal of interest in the potential for exporting wood pellets,” said Henshaw.

Eastport installed a conveyor system capable of handling wood pellets and other bulk commodities. The port of Eastport is the deepest natural seaport in the continental U.S. As the easternmost port in the United States, Eastport is the closest deepwater port to European markets.

That proximity gives all of Maine’s ports a competitive advantage over southern deepwater ports. With less ocean to cross, the fuel costs diminish. Freight costs from the Northeast of America to Europe are favorable over the Southeast by $4 per ton, increasing to $7 per ton from the Gulf Coast.

Eastport’s cargo operations include shipments of wood pulp to destinations as far away as China and shipments of dairy cows and beef cattle to Turkey and Russia.

In February, Thermogen Industries, a subsidiary of Cate Street Capital, announced that they will build a torrefied wood pellet biofuel manufacturing facility in Eastport.

“Our clean fuel product, torrefied wood pellets, will be shipped overseas as an alternative fuel for coal-fired power plants that need to reduce harmful emissions,” said Cate Street Capital President/CEO John Hallé. “Locating next to the port of Eastport would greatly reduce our shipping costs while providing new incremental business for the port.”

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Woodpellets manufacturing has increased in Maine dramatically since 2007. photo by Ramona du Houx

Thermogen uses biomass material that’s left behind from wood harvesting operations. Its torrefaction process involves changing the properties of wood using microwave technology, not heat, which creates a black pellet that burns with similar BTU heat output and handling characteristics as coal, but much cleaner. Coal-fired power plants could burn the torrefied wood in lieu of coal to lower emissions and meet increasingly stringent environmental regulation.

Depending on the size of Thermogen’s facility, it could create approximately 75 new jobs in Eastport and over 300 woods-based jobs.

Cate Street Capital, an investment group that specializes in renewable energy and green technology projects, bought the Millinocket paper mill after they consulted a study which the Maine Technology Institute (MTI) funded several years ago during the Baldacci administration, which recommended that Maine consider producing thermal, or torrefied, wood. The product has the potential to replace the use of coal. That report, with its recommendations, was key in helping the mill transition, putting workers back on the job.

“The future is bright,” said Cate Street Capital’s Scott Tranchemontagne. “We have done our due diligence and are moving forward with torrefied wood.”

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Congresswoman Chellie Pingree speaks at the celebration of the DownEaster coming to Brunswick. Public and private sectors worked together to make it happen.Photo by Ramona du Houx

By the end of this year, the Millinocket site is expected to start producing torrefied wood products, reaching commercial operations in early 2014. Railroad lines that were used by the former mill owners could be utilized once again.

The Eastport Port Authority asked the state to fund a rail infrastructure upgrade in 2009. But the Republican-controlled legislature and the governor didn’t, although the investment would have helped ship bulk commodities like wood pellets.

Searsport is where George Soffron, CEO of Maine-based Corinth Wood Pellets LLC, the first wood pellet manufacturer in Maine, has plans to export pellets in 2014.

F.E. Wood & Sons, with their new 312,000-metric-ton wood pellet plant in Baldwin, intends to export white pellets from Portland to European markets.

“They will likely be coal-fired power plants, which are using pellets to displace carbon emissions,” said Tony Wood, vice president of F.E. Wood & Sons.

F.E. Wood & Sons are in the process of transforming their 130-year-old business into manufacturing pellets.

“Maine has great potential for pellet export,” said Wood. “European markets are certainly a very exciting place to be working right now!”

The mill would have capacity to make 300,000 tons a year and employ 30 workers, with more jobs in the forest and transportation chain. Part of Wood’s plan is to use the Mountain Division rail link to Portland for transportation, and initial discussions to move forward with renovating the line started under the Baldacci administration.

“We have done a great deal of work to activate the Mountain Division rail link, and there is a fair amount of support through the community and state legislature to see it returned to commercial activity. There are several challenges, but I believe once our facility is operating we will be able to renew our efforts to reactivate the line to our site,” said Wood.

“In the meantime, it is very exciting to see Portland and Pan Am making investments and improvements to service in the Portland area — this has potential to improve throughput and service for our project, as well as helping to open a freight bottleneck for industries in Maine trying to reach East Coast ports and other points in the U.S.”

Transportation hub improvements often lead to others. Recently, the Maine Port Authority received a $150,000 federal grant to develop a new type of ship that could help restore cargo shipping between the Portland terminal and East Coast ports.

At the same time, LePage refuses to release a voter-approved bond for more port infrastructure improvements. Eastport and Searsport could see $1.5 million and $17 million respectively from a 2012 bond package.