Texas Ports - Value to the Nation
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Presented by Col. Christopher W. Sallese, Commander, Galveston District, US Army Corps of Engineers at the TWCA Fall Conference
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Texas Ports - Value to the Nation
- 1. Texas Water Conservation Association Oct. 25-26, 2012 TEXAS PORTS - VALUE TO THE NATION Col. Christopher W. Sallese Commander, Galveston District U.S. Army Corps of Engineers This briefing is UNCLASSIFIED US Army Corps of Engineers BUILDING STRONG®
- 2. UNCLASSIFIED USACE SNAPSHOT USACE projects and the water resources managed—valued at some $165 billion—generate jobs and contribute to a stronger economy, environment and quality of life for all Americans. USACE is the nation's largest provider of outdoor recreation opportunities. USACE is the largest owner and operator of hydroelectric power plants in the U.S. and one of the largest in the world. USACE owns and operates 702 dams and maintains 12,000 miles of waterways. USACE’ Regulatory Program protects the nation's aquatic resources while allowing effective and efficient economic development. BUILDING STRONG®
- 3. UNCLASSIFIED AGENDA TEXAS PORTS – VALUE TO THE NATION The Texas System Navigation System Health Texas Port & Inland Waterway Statistics Economic Factors Federal Navigation Funding, National/Texas Water Control Structures Post Panamax Conclusions BUILDING STRONG®
- 4. UNCLASSIFIED The Texas System Texas is the number one state in the nation for maritime commerce 760 miles shallow draft GIWW links the entire system 13 shallow draft ports 240 miles deep draft 15 deep draft ports 4 ports in the top 10 Accounts for over $300 billion in economic value Provides over one million direct jobs $40B in private investment happening now Panama Cannel Eagle Ford Shale BUILDING STRONG®
- 5. UNCLASSIFIED PETROCHEMICAL PIPELINE DIST. Houston = $390 million in commerce per day Texas Coast - where the U.S. large refinery infrastructure exists…the main start and end point for the value chain. BUILDING STRONG®
- 6. UNCLASSIFIED PORT STATISTICS & STUDIES 2011 Channel 2010 UNDER STUDY TEXAS AUTHORIZED TONNAGE (millions) 2010 Availability Value of IMPROVED PORTS DEPTH (ft) DOMESTIC FOREIGN TOTAL 1/2 Width Tonnage DEPTH (ft) STATUS Deep Draft Coastal Construction Completed in 22.2% of Houston (2) 45 67.6 159.6 227.1 53.3% $170.4B 45 June 2005 Chief's Report Signed July nation’s Beaumont (4) 40 25.2 51.8 77 12.9% $37.8B 48 2011 total export Corpus Christi (6) 45 18.8 54.8 73.7 83.8% $35B 52 LRR approval Dec 2012 Construction Completed in tonnage Texas City (10) 45 16.5 40.1 56.6 87.5% $28.5B 45 June 2011 Chief's Report Signed July (maritime) Port Arthur (25) 40 10.8 19.5 30.2 12.9% $13.1B 48 2011 Chief's Report December Freeport (27) 45 4.3 22.3 26.7 61.6% $13.7B 50-55 2012 Construction Completed Galveston (41) 45 5.9 8.0 13.9 76.0% $8.6B 45 March 2011 43.4% of Matagorda (54) 38 2.2 6.7 8.9 27.5% $2.4B 38 No improvements forecasted imported Brownsville (78) 42 2.1 2.5 4.6 66.3% $3.1B 45-52 Chief's Report Dec 2013 crude oil Victoria (89) 12 2.8 0 2.8 62.5% $2.1B 12 No improvements forecasted (maritime) Inland Waterway GIWW 12 67.0 Varies $34.6B 12 Texas is the nation's number one state for waterborne commerce (Major ports = 521.5 million tons worth $314.7 billion) - [source - IWR] BUILDING STRONG®
- 7. UNCLASSIFIED TEXAS EXPORTS Year Traffic Commodity US SWG SWG US Total SWG Total SWG Total Tons Total Tons Tons % $-value $-value $-value % Other Chemical and Related 2010 Overseas-Exports 51,391,464 25,341,797 49.3% $91,129,716,109 $29,410,612,005 32.3% Products Distillate, Residuals & other Fuel 2010 Overseas-Exports 55,498,570 28,223,919 50.9% $24,851,646,909 $12,441,380,086 50.1% Oils; Lube Oil & Grease Petroleum Pitches, Coke, 2010 Overseas-Exports 34,010,721 14,839,856 43.6% $4,787,161,004 $1,931,017,553 40.3% Asphalt, Haptha & Solvents 2010 Overseas-Exports Wheat 28,573,473 10,253,744 35.9% $6,303,567,756 $2,285,160,231 36.3% 2010 Overseas-Exports Gasoline, Jet Fuel, Kerosone 25,130,656 16,999,295 67.6% $14,742,150,327 $10,304,486,561 69.9% Barley, Rye, Oats, Rice and 2010 Overseas-Exports 7,566,469 2,937,633 38.8% $2,530,395,992 $607,559,745 24.0% Sorgum Grains All Manufactured Equipment, 2010 Overseas-Exports 22,207,155 2,953,925 13.3% $160,612,903,944 $24,104,041,873 15.0% Machinery and Products BUILDING STRONG®
- 8. UNCLASSIFIED TEXAS IMPORTS Year Traffic Commodity US SWG SWG US Total SWG Total SWG Total Tons Total Tons Tons % $-value $-value $-value % 2010 Overseas-Imports Crude Petroleum 423,611,392 182,804,854 43.2% $200,249,352,676 $86,863,625,063 43.4% Distillate,Residual & Other Fuel 2010 Overseas-Imports 57,321,506 18,316,053 32.0% $21,521,271,303 $7,289,466,131 33.9% Oils; Lube Oil & Greases Other Chemicals and Related 2010 Overseas-Imports 33,196,384 9,455,386 28.5% $54,271,443,752 $6,746,689,271 12.4% Products Primary Iron and Steel Products 2010 Overseas-Imports 21,041,435 5,220,000 24.8% $17,740,874,422 $4,973,544,844 28.0% (Ingots, Bars, Rods) 2010 Overseas-Imports Gasoline, Jet Fuel, Kerosene 36,445,862 5,233,673 14.4% $9,604,883,681 $2,265,694,184 23.6% 2010 Overseas-Imports Non-Ferrous Ores and Scrap 14,559,145 7,315,196 50.2% $3,421,736,181 $559,022,702 16.3% Sand, Gravel, Stone, Rock, 2010 Overseas-Imports 14,705,864 3,669,977 25.0% $927,612,258 $200,717,480 21.6% Limestone, Soil, Dredged Material Building Cement & Concrete, Lime, 2010 Overseas-Imports 9,669,341 1,347,010 13.9% $6,117,946,391 $386,924,711 6.3% Glass All Manufactured Equipment, 2010 Overseas-Imports 66,852,486 2,143,044 3.2% $430,852,307,058 $14,579,458,660 3.4% Machinery and Products BUILDING STRONG®
- 9. UNCLASSIFIED ECONOMIC FACTORS Positive Factors- • Texas ports create over 1.0 million direct jobs regionally and ~1.3 million indirect jobs nationally • Port of Houston alone helped generate $4.5 billion in local and state tax revenue • Current and future exports help stabilize the dollar the reduce the value of the federal deficit. (national revenue) • Allows nation to optimize the benefits of prior year strategic investments in navigation and supply chain infrastructure • GIWW provides a intermodal linkage through domestic and international markets and facilities Negative Factors- • 1’ of draft restriction = lost benefits due to lightering and lightening loads Houston - $188 million/year Matagorda - $80 million/year GIWW - Texas – 130 million/year • Texas ports receive less than $.25 on the dollar of HMTF contributions for O&M • From a study aspect ready to take advantage of Panama Canal expansion •(Two channels authorized at > 50 feet with two more pending…none constructed) • The current channels depths do not optimize transportation or supply chain efficiencies The nation’s navigation system requires a strategic investment to realize its full economic benefit. BUILDING STRONG®
- 10. UNCLASSIFIED U.S. IMPORT/EXPORT FORECAST Source: IHS Global Insight, The U.S. Economy, The 30-year Focus, First Quarter 2012 BUILDING STRONG®
- 11. UNCLASSIFIED NAVIGATION FUNDING National Navigation Funding $2.0 Navigation Funding Amounts Includes Federal Appropriations from: General Investigations Billions $1.0 Construction General Operations & Maintenance $0.0 FY08 FY09 FY10 FY11 FY12 FY13 Galveston Navigation Funding $120 Not Included; $100 Federal Appropriations from: $80 Millions ARRA $60 Storm Supplemental $40 $20 $0 FY08 FY09 FY10 FY11 FY12 FY13 BUILDING STRONG®
- 12. UNCLASSIFIED SYSTEM HEALTH REQUIREMENTS Adequate funding stream to support: Dredging project depth + advanced maintenance ―just in time‖ Construct incremental levee capacity O&M lock and gated facilities – GIWW Conduct jetty repairs The system is rapidly losing its Prepare placement areas and DMMPs resiliency. Conduct O&M discretionary studies Implement DAMP activities Environmental sustainability Safety (navigation) In our current strain fiscal environment, we must consider revamping our current financial options. (HMTF and IWTF changes, user fees, PPP, cost shares) Navigation Mission Provide a balance of funds across the required activities to maintain an efficient, interactive and reliable navigation system BUILDING STRONG®
- 13. UNCLASSIFIED REPORT OBSERVATIONS & FINDINGS U.S. Port and Inland Waterways Modernization: Preparing for Post-Panamax Vessels • World trade and U.S. trade is expected to continue to grow • Post-Panamax size vessels will dominate the world fleet in the future • These vessels will call in increasing numbers at U.S. ports that can accommodate them • Along the Southeast and Gulf Coast there may be opportunities for economically justified port expansion projects to accommodate post-Panamax vessels (rising population, trade forecasts and current port capabilities). View full report: http://tinyurl.com/953xc57 BUILDING STRONG®
- 14. UNCLASSIFIED REPORT OBSERVATIONS & FINDINGS U.S. Port and Inland Waterways Modernization: Preparing for Post-Panamax Vessels • Investment opportunities at specific ports will need to be individually studied • Transportation cost saving using post-Panamax size vessels to ship to Asia through the Panama Canal may lead to an increase in grain traffic on the Mississippi River for export at Gulf ports • Individual investment opportunities for port expansion can be identified - preliminary estimates indicate the total investment opportunities may be in the $3-$5 billion range • Environmental mitigation costs associated with port expansion can be significant and will play an important role in investment decisions • The primary challenge with the current process to deliver navigation improvements is to ensure adequate and timely funding to take advantage of potential opportunities View full report: http://tinyurl.com/953xc57 BUILDING STRONG®
- 15. OTHER FACTORS TO CONSIDER • The need for more multi-modal connectivity and capacity of the intermodal freight transportation corridors (water-rail-truck) • Environmental Impacts- avoidance, protection and mitigation • Opportunities to contribute to the Administration’s initiative to increase exports, energy independence and enhance national security • Local sponsor commitment to cost sharing and community support • Additional consideration for Ports that service multiple regions nation wide verse a local catch basin (lower use harbors on Texas coastline) BUILDING STRONG®
- 16. UNCLASSIFIED Opportunities Ready Now Texas Navigation • Corpus Christi (main channel) – CG to continue PED • Cedar Bayou – CG for new start construction • Sabine-Neches Waterway – GI for new start PED • Brazos Island Harbor – GI to finish ongoing study in 2014 • Freeport Channel Deepening – GI to start PED Ports that are ready: •Port of Virginia (Norfolk) •New York Ports that are investing: •Baltimore (ready by 2015) •Miami is investing $2 billion into improvements •Savannah is preparing to move forward with a $652 million deepening project •South Carolina Legislature has committed $300 million to dredging for Charleston Brazos River Floodgates BUILDING STRONG®
- 17. UNCLASSIFIED WHY The GULF? WHY NOW? Here: External factors (Panama Canal, Gulf and Brazil oil reserves, LNG, Eagle Ford Shale) Private industry is postured to invest over $20 billion into infrastructure on the Texas coast (LNG, DOW , Chevron, BASF, TEPCO) LNG exports expected to increase Texas already optimized for energy production Now: The number of Post-Panamax vessels in the world fleet is expected to more than double. These Post-Panamax vessels typically have a minimum hull draft of 39-60 feet. For liquid bulkers, the world vessel fleet is expected to see an increase similar to the bulkers. The tankers on order typically have a hull draft is 49-70 feet. These largest tankers are currently lightered or lightened at gulf ports. No Gulf port has a draft greater than 50 feet. Completed navigation studies posture ports for real investment Texas Gulf navigation system health is getting out of balance and losing resiliency Rising price of oil, grain and the worldwide demand to for low priced natural gas Continued deferment of investment incurs annual lost benefits and project cost growth; erodes the Corps’ value to the nation and our relationship with our partners. BUILDING STRONG®
- 18. Sabine-Neches Waterway Neches River Saltwater Barrier Project Summary: The project insures freshwater availability for municipal, agricultural and industrial uses as well as providing for fish and wildlife habitat protection. Key Partners The U.S. Army Corps of Engineers Galveston District and their cost sharing partner, the Lower Neches Valley Authority, along with the U.S. Fish and Wildlife Service, Big Thicket National Preserve, the City of Beaumont, the Texas Water Development Board, the Texas Commission on Environmental Quality, the Texas Parks and Wildlife Department and many others came together for this project. BUILDING STRONG®
- 19. Sabine-Neches Waterway Neches River Saltwater Barrier Results and Accomplishments • Imbedded within the project design were environmental education and recreational considerations for the public. • A public boat ramp, public restrooms, picnic area, walking trail, and stocked fishing ponds provides the public world class facilities as well as increased access to the Neches River and the Big Thicket National Preserve. • Aside from protecting the freshwater supply of Southeast Texas, the project provides for savings of 200,000 acre-feet per year of water, that does not have to be released from Sam Rayburn reservoir to control the saltwater. • Continues to insure adequate freshwater inflows into the bays and estuaries. • The completed project received an Outstanding Performance Appraisal and the 2004 Special Recognition Award for Design and Environmental from the U.S. Army Corps of Engineers. BUILDING STRONG®
- 20. UNCLASSIFIED CONCLUSIONS • Texas is a ready and supportive partner for federal investment into required navigation improvements which have national benefits • Keys to success Port partnerships Partnership with Dredging Industry Managing expectations Strategic communications Facilitating private investment (risk reduction) • Texas is in desperate need of comprehensive coastal study to mitigate hurricane risks BUILDING STRONG®
- 21. QUESTIONS? Questions? BUILDING STRONG®
- 22. BUILDING STRONG®
Editor's Notes
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- The Texas Coast is where our Nation has chosen to invest in large refinery capacity….is not cost-feasible to invest again to build it elsewhere…it is good Value for the Nation to modernize and rehabilitate our Texas navigation channels to allow the Nation to continue realizing the economic benefits of this National Transportation and Refinery infrastructure investment and reality.Links to Nation’s Strategic Petroleum Reserve – storage and inlet/outlet terminals
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- To remain competitive in a changing global trade market, the U.S. would need to continue making the justified investments necessary to maintain and improve its navigation transportation infrastructure where it is appropriate and efficient to do so. Understanding the current funding challenges and making long-term plans for operations and maintenance (O&M) and justified investments are critical to developing an effective vision for a competitive navigation system. USACE Civil
- Coastal ports • Increase Federal appropriations in the USACE budget for harbor maintenance and improvements while maintaining current cost share responsibilities. • Increase Harbor Maintenance Trust Fund (HMTF) user fees and allocate increased revenues to harbor improvements. • Maintain or increase Federal appropriations and also increase local cost share requirements. • Encourage individual port initiatives by phasing out the HMTF, expecting individual ports to collect their own fees and make their own investment and maintenance decisions. Inland waterways • To support waterway improvements, increase the fuel tax and provide increases in Federal appropriations to track with the increased revenues fl owing into the IWTF; depending upon the revenues from the fuel tax, reduce the share of total costs that is paid from general appropriations. • Replace the fuel tax with a vessel user fee and/or combine the fuel tax with a vessel user fee and increase revenues and appropriations for improvements at least by the amount of the increased revenues.2 • Implement public-private partnerships with the responsibility for improving, operating and maintaining the inland waterway navigation infrastructure along specified segments of the system. Financing for these actions would be secured in private capital markets with revenues to repay the financed activities earned from a combination of vessel user fees (segment fees or lockage fees) and appropriations.
- There is currently a lack of post-Panamax capacity at U.S. Gulf and South Atlantic ports – the very regions geographically positioned to potentially be most impacted by the expected changes in the world fleet.The availability of larger, more efficient vessels passing though the new locks on the canal is expected to potentially have at least three major market effects. (1) Currently, there is significant freight shipped to the eastern half of the United States over the intermodal land bridge formed by the rail connections to West Coast ports. The potential for reduced cost of the water route through the canal may cause freight traffic to shift from West Coast to East Coast ports. (2) To take full advantage of the very largest vessels that will be able to fit through the expanded canal but may be too large to call at most U.S. ports, a transshipment service in the Caribbean or a large U.S. port may develop. The largest vessels would unload containers at the transshipment hub for reloading on smaller feeder vessels for delivery to ports with less channel capacity. (3) On the export side the ability to employ large bulk vessels is expected to significantly lower the delivery cost of U.S. agricultural exports to Asia and other foreign markets. This could have a significant impact on both the total quantity of U.S. agricultural exports and commodities moving down the Mississippi River for export at New Orleans.
- There are many non-financial factors to be considered when modernizing the Nation’s navigation infrastructure:A modernization strategy should be part of a national transportation strategy that considers multi-modal connectivity and capacity of the intermodal freight transportation corridors. This would necessitate consistency with other Federal programs such as DOT Tiger Grants. Navigation infrastructure modernization will have environmental impacts that will most likely require impact avoidance or replacement of lost environmental quality. Total avoidance of impact may be indicated where the effects are of such national significance that development of transportation infrastructure at the proposed site should not be supported at the Federal level. Opportunities to contribute to the Administration’s initiative to increase exports, energy independence and enhance national security should be considered. Local sponsor commitment in terms of cost sharing and community support should be taken into consideration. Consideration should be given to ports that facilitate traffic to multiple regions of the country as opposed to serving only a local catchment area.When infrastructure projects are planned, designed and implemented, they should explicitly include the concept of adaptive management (i.e., the identification of sequential decisions and implementation based on new knowledge and thresholds) within a risk management framework.
- Neches River Saltwater BarrierCongress authorized funding more than 30 years ago to construct the Neches River Saltwater Barrier in Southeast Texas, near Beaumont. As a project in the Water Resources Development Act of 1976, the saltwater barrier was conceived to control water salinity, improve water supply and navigation, and to enhance fish and wildlife recreation. The saltwater barrier impedes the flow of brackish water from the Gulf of Mexico into the Neches River, while allowing barges and recreational boats unfettered access. The region also relies on the Neches River as an important source of high quality water for municipal drinking water, agricultural irrigation and industrial purposes. When the river flow is low because of drought or other environmental influences, saltwater from the Gulf of Mexico can flow upstream. If the saltwater enters water intake structures on the Neches River, the higher salinity can damage crops or contaminate water meant for consumption by humans or livestock. During low-water or drought conditions when the river’s flow is not sufficient to flush the naturally encroaching saltwater back into the sea, a series of five independently operated tainter gates can be closed to manually keep the plume from migrating upstream.The $32 million project also includes a 4,500-square-foot administration building with a water quality laboratory and control rooms; one public and private boat ramp; a 2,000-square-foot boathouse; public restrooms, and access road and parking lots.The completed project received an Outstanding Performance Appraisal and the 2004 Special Recognition Award for Design and Environmental from the Corps of Engineers.