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Time is ripe to explore alternative energy commitment

If there was ever a good time to question Oregon’s commitment to alternative energy exploration, recent developments indicate this is one of them.

As announced in a press release Monday, a plant constructed at Port Westward in large part with the help of Oregon tax subsidies, including roughly $11 million in Oregon Business Energy Tax Credits and a $20 million loan from the state has been sold to a company whose portfolio indicates a commitment to fossil fuels over the alterative. The state lost its loan when the plant filed bankruptcy in 2009.

The company, Global Partners LP, is headquartered in Massachusetts and announced it had signed an agreement to purchase the former Cascade Grain ethanol plant from Cascade Kelly Holdings LLC at a price of $95 million.

As has been reported in other news media and aligns with a story we had been pursuing, the facility is now characterized as a “West Coast crude oil and ethanol facility.” In fact, the thrust of the press release is that the acquisition enhances Global Partners’ virtual pipeline to ship oil from the Midwest and, with the pending purchase of a plant on the East Coast, the company will have coast-to-coast reach for its oil supply and refining customers.

The press release, lastly and almost as an afterthought, touts the purchase as gaining the company the largest ethanol facility on the West Coast. No mentionable quantities of commercial ethanol had been produced at the plant, however. More important to Global Partners, it seems, is the fact it gained a rail transloading facility serviced by BNSF, 200,000 barrels of storage capacity, a deepwater marine terminal and a 1,200-foot dock. Not mentioned is that nearly all of those assets were financed with public money.

As we have learned, the crude oil component is a relatively new development, and the facility only started transloading unit trains of crude in November, with much of the product — no doubt pegged for export, if current lobbying trends from the energy industry are any indication — apparently stemming from the boom in shale oil extraction in North Dakota. Our efforts over the past few weeks to gain a better sense of the oil shipping activity have been largely met with silence. At best, there has been an acknowledgement from the Port of St. Helens the shipping was occurring, though such acknowledgement was coupled with statements indicating the agency perceived the development as out of its hands.

The Port of St. Helens, which owns the 43-acre site where the plant is located, would have to provide written approval for transfer of the lease from Cascade Kelly Holdings to Global Partners, who has publicly said on several occasions it had intended to restart the ethanol plant. Market forces determined otherwise, however.

Columbia County residents, and Oregonians as a whole, should feel a sense of disappointment at this development. At the least, it represents a failed incentive program for alternative energies and a reversion to fossil fuels and the future promise of greater exportation of our country’s natural resources. In time, it will be interesting to watch as such developments factor into Governor Kitzhaber’s 10-year Energy Plan, which had been released in December. A component of the plan has been the examination of government incentives for alternatives energy development and what role those incentives play, for better or worse.

It was not known, as of press time, how many jobs Global Partners’ oil storage and shipping yard will generate at Port Westward, though our experience with transloading facilities is that it is unlikely to be considerable. We are encouraged, on the other hand, that the county should be positioned to gain tax revenue from the plant, which we do not believe should qualify for Port Westward’s enterprise zone. We are still exploring this angle.

Also unclear, as of press time, is how many unit trains hauling oil will ultimately pass through Columbia County. So far there have been 15, but we expect to see that figure increase as Global Partners ramps up its enterprise in earnest. A keen eye on rail capacity and how it affects residents who live in communities divided by the tracks, especially in light of a proposed coal transloading facility at Port Westward, must be employed when considering these projects.

Cascade Grain ethanol terminal, originally billed as a $197 million ethanol production facility when construction started in 2006, has had a laundry list of problems.

Though construction concluded in spring 2008, the plant operated only 20 days that summer before it shut down. Problems with how it had been constructed and a downturn in the corn ethanol market, which was heavily dependent on government subsidies and programs such as the BETC, led to its demise.

Cascade Grain LLC filed bankruptcy in 2009 and JH Kelly LLC, which later started the subsidiary Cascade Kelly Holdings, picked up the plant for $15 million in credited money owed to the company, which up until its foray into insolvent ethanol terminals had been priority focused on commercial HVAC and plumbing services for commercial operations.

At the time JH Kelly took ownership, the plant was valued at $40 million.

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