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Why the Calcasieu Ship Channel is Vital to the Region’s Economic Success

Posted on: April 2nd, 2014

Lagniappe Magazine, March 27, 2014

 

With the eyes of America on Southwest Louisiana—and the estimated $62 billion in development projects coming to the region—it stands to reason that special attention would also be paid to the infrastructure so necessary for this economic activity—most notably the Port of Lake Charles and the Calcasieu Ship Channel.

 

“The Port is vital to these projects,” said Bill Rase, Executive Director of the Port. “Existing industries and the industries coming into the area count on the Calcasieu Ship Channel to transport their goods.”

 

A public body created by the Louisiana Legislature in 1924 as the Lake Charles Harbor & Terminal District, the deepwater Port of Lake Charles is currently listed as the country’s 13th-busiest seaport in the country by the U.S. Army Corps of Engineers, based on cargo tonnage. The Calcasieu Ship Channel currently accommodates 54 million tons of cargo annually.

 

“Waterborne transportation remains one of the most efficient and environmentally safe methods for global trade,” said Rase.

 

Waterborne commerce at the Port is expected to double by 2020. That kind of increase could push the Port of Lake Charles into the Top Ten busiest ports in the nation.

 

“Ports are not visible to the average person who is not involved in industry,” said Channing Hayden, Director of Navigation and Security for the Port. “Yet 90 percent of the items folks buy come in by ship and much of our exports go out by ship. The items in our closets wouldn’t be there without the maritime industry.”

 

In addition to such cargoes as grain, forest products, aluminum, petroleum coke, barite and rutile, a significant portion of the nation’s energy resources—an estimated 7.5 percent— currently moves up and down the Calcasieu Ship Channel each year.

 

The Port manages the channel, which runs inland for 36 miles and extends out into the Gulf of Mexico for another 32 miles, as well as two marine terminals—the City Docks and Bulk Terminal No. 1.

 

The City Docks, a 200-acre general cargo facility located in Lake Charles, features an automated terminal and the Gulf Coast’s first new grain terminal in more than 40 years. The new grain terminal will have a capacity to store 60,000 tons of cargo in phase one of construction, with storage for an additional 120,000 tons planned in the second phase.

Discovery Channel: Prospect Companies See the Channel’s Strategic Value

 

The past year has seen an unprecedented number of major project announcements, trumpeting more than $60 billion in investment coming to Southwest Louisiana. The Port of Lake Charles has played a key role in attracting that investment, whether by offering prime channelside land for development, by assisting in negotiations and arrangements with industrial prospects, or simply by maintaining an effective transportation route—the Calcasieu Ship Channel—that has brought industry to this area for decades.

 

Most of these projects—which include Sasol North America, Lake Charles Clean Energy, Sempra Energy’s Cameron LNG, IFG Port Holdings, Magnolia LNG, Trunkline LNG and G2X Energy—are coming to this area specifically to make use of the Calcasieu Ship Channel.

 

One factor that has contributed heavily to this influx of industrial projects is the discovery of major natural gas resources in the U.S. Much of that natural gas will make its way to Southwest Louisiana to be liquefied and exported via the Calcasieu Ship Channel. That trend will only strengthen the channel’s claim to be “America’s energy corridor.”

 

Initial projections are that the announced projects will create nearly 18,000 construction jobs and 14,000 additional direct and indirect jobs. Anticipating a demand for housing for the growing workforce, a private company broke ground recently on a $70 million temporary employee housing village, to be located on Port property. Once completed, the facility could house as many as 4,000 workers. “In order for all of these projects to be successful we have to have a place for workers to stay,” said Rase.

 

As a result of this seemingly endless uptick in business, the Port has plans for nearly $275 million in capital improvements over the next 5 years. Recently completed improvements include a new unloader for the bulk terminal, which increases offloading and cargo-handling capacity, and new rail tracks at the City Docks. Designed as a loop, these tracks are critical for operations at the new grain elevator.

 

Improvements at the City Docks also include a new entrance plaza near the intersection of Marine and Sallier streets to more efficiently process incoming and outgoing truck and other vehicular traffic while enforcing Department of Homeland Security credentialing requirements, and a new command and control center for the Harbor Police Department.

 

Whether Channel: Can the Channel Get the Maintenance Funds It Needs?

 

Despite the burgeoning economy—or maybe because of this growth—the Port still has challenges, not the least of which is funding for maintenance of the channel.

 

The Corps of Engineers recently allocated $10 million for the dredging of a crucial 3.5-mile section of the waterway. A portion of this allocation, which was from the 2014 Omnibus Budget Bill discretionary fund, will be added to the $16.24 million originally budgeted for this fiscal year to dredge between mile markers 7 and 10.5. The widening will be to a federally mandated width of 400 feet.

 

Left with only the $16.24 million originally budgeted for harbor maintenance and security—which encompasses dredging—this section of the channel would have been significantly shy of the mandatory width at only 250 feet.

 

A narrowed corridor would have adverse economic consequences for channel users—and Southwest Louisiana as a whole, according to Hayden.

 

“Without dredging, there are consequences—higher costs to ship into or out of our harbors,” he said. “Higher shipping costs will ultimately be passed on to consumers.”

 

In and of itself, the Army Corps of Engineers has limited funds. During the President’s budgetary process, funds are appropriated for the Corps of Engineers from the Harbor Maintenance Trust Fund (HMTF), which was established in 1986 specifically to subsidize the operation and maintenance of ports and harbors. The HMTF is funded by a Harbor Maintenance Tax levied on imported goods.

 

For a number of years, appropriations from the Harbor Maintenance Trust Fund (HMTF) have lagged behind the estimated $1.6 billion collected annually. As a result, the HMTF had a surplus of approximately $7 billion at the end of FY2012. That surplus continues to grow—as does the need for additional dredging dollars at ports throughout the U.S.

 

Dredging is an annual expenditure for the Port of Lake Charles that totals between $40 million and $60 million and entails removing approximately 4 million cubic yards of material from the channel each year. The excavated mud has historically been used to shore up banks of the channel and as fill for the Port’s properties.

 

“Louisiana’s coast supports highways, ports, pipelines and navigational waterways, critical infrastructure that are important to the nation’s economy,” said Hayden. “Without restoration efforts and at the current rate our coasts are eroding, hundreds of miles of waterways and several of Louisiana’s ports will be exposed to open water within 50 years.”

 

Sediment dredged from the local channel has been used to build up deteriorated wetlands in the Sabine National Wildlife Refuge west of the channel in Cameron Parish. And sediment from the dredging of Miles 7 to 10.5 in 2014 will be pumped into nearby marshland to restore it to health. As plants and grasses root in the slightly elevated mud, new marsh is created. CWPPRA has identified approximately 6,200 acres of Southwest Louisiana’s coastal marshes for possible marsh creation projects in conjunction with the Port.

 

“This is a synergy that could be developed to maintain the region’s economy and environment at the same time,” said Hayden.

 

History Channel: How the Calcasieu Ship Channel Came To Be

 

A water route from Lake Charles to the Gulf of Mexico has been important to business and industry leaders in Southwest Louisiana since the early 1800s when lumber and agriculture were the kings of commerce in the region.

 

With the end of the Civil War in 1865 came a demand for Louisiana lumber to rebuild a war-torn South. And with the demand for lumber came the need for better access to the mills that had sprung up throughout Calcasieu Parish. At the time, Lake Charles was a port of call for vessels navigating the shallow Calcasieu River, but sandbars made the river impassable to all but shallow-draft schooners, which were not suitable for transporting lumber. The lumber industry declined, in part due to limited access to and from the Gulf, to be replaced by a rapidly growing rice industry. Ironically, the rice industry also needed navigable waterways.

 

Cuts were finally made through sandbars in Calcasieu Lake, resulting in a 70-foot-wide by 7,500-foot-long channel to the Gulf. But pleas for a deeper channel went unheeded until Congress authorized a deputy harbor tax collector for Lake Charles in 1880. However, it was another 10 years before a harbor tax collection office was established at Calcasieu Pass.

 

With the completion of the Intracoastal Canal in 1915, the Calcasieu and Sabine rivers were connected by a 20.5-mile-long, 12-foot-deep canal with a 90-foot bottom width, and business leaders saw this as an opportunity to open Calcasieu Parish for commerce.

 

Under provisions of the 1921 state constitution, parish police juries were authorized to fund and initiate public works projects. By act of the legislature that year, the Calcasieu Parish Police Jury was authorized to call a bond election for the dredging to widen Calcasieu River and Calcasieu Lake.

 

A bond election was held a year later, and voters approved $2.75 million to dredge the Calcasieu River to a 30-foot depth, with a bottom width of 125 feet, which provided a navigation route through the Intracoastal Canal to the Sabine River and Gulf of Mexico.

 

With the authorization of the Lake Charles Harbor and Terminal District in 1924, a Board of Commissioners was appointed by the governor, and the process of building a terminal facility—and raising the requisite funding—began.

 

The board acquired the Walnut Grove site, a plot of land bounded by the Calcasieu River and Contraband Bayou, a port director was hired, and transit sheds were completed and space leased. On April 2, 1926, the S.S. Sewalls Point was the first oceangoing vessel to bring cargo to the newly authorized port.

 

With local industry booming, the need for a wider, deeper channel grew. Congress ultimately appropriated $9.2 million for channel dredging and construction of the Calcasieu jetties in 1938. As a result, the Calcasieu Ship Channel was dredged from Lake Charles to the Gulf of Mexico, a distance of 34 miles, to a depth of 33 feet and to a bottom width of 250 feet. It wasn’t until the 1960s that the channel was expanded to 40 feet deep and 400 feet wide, as it remains today.

 

There’s a sense of déjà vu to the latest chapter in the Port’s storied history. Business is booming in Southwest Louisiana and the Port of Lake Charles is growing its facilities—and maintaining the channel—to meet the demand.

 

And it’s the Port of Lake Charles and the Calcasieu Ship Channel that make Southwest Louisiana a serious player in the game of global trade.

Louisiana exports reach $63.1 billion in 2013

Posted on: February 26th, 2014

Louisiana’s worldwide merchandize exports reached $63.1 billion in 2013, an increase of .3 percent from 2012, according to a report by the World Trade Center of New Orleans. The state’s chief export markets were China, Mexico and Canada, followed by Japan, the Netherlands, Singapore and Brazil. Louisiana ranked as one of the top exporting states in the country, surpassing Florida to place sixth overall.

The news comes after a banner year for U.S. exports, which set a new record of $15.8 trillion, a 2.14 percent rise from 2012.

Petroleum and coal products remained the top exported products in Louisiana, reaching $25.5 billion, a 9.7 percent rise from $23.2 billion the previous year. Agricultural and chemical products followed, posting earnings of $15.8 billion and $9.1 billion, respectively.

“Louisiana exports continue to be driven by investments in manufacturing and refining on the Lower Mississippi River,” said Gary LaGrange, president and CEO of the Port of New Orleans. He added that the state continues to “strive to reach the President’s goal of doubling U.S. exports by 2016.”

By contrast, petroleum and coal were only the fifth highest exported products in the United States, with agricultural products placing eighth overall.

The World Trade Center of New Orleans also noted that Louisiana showed a marked increase in exports to France and Panama last year. Exports to France surged by 121.9 percent from 2012, while exports to Panama climbed 110.13 percent.

Despite doing $8.23 billion in exports to China in 2013, the number represented an 11.57 percent decline from the previous year. A report published by the Associated Press attributed the slow-down to an increased domestic demand from Chinese consumers.

Information from: NOLA.com

Port of Lake Charles to Issue Revenue Bonds

Posted on: November 19th, 2013

Revenue bonds amounting to $40.5 million to fund capital improvements at the Port of Lake Charles will be sold in the municipal bond market Wednesday, Nov. 20, according to port executive director Bill Rase, and local investors will receive purchase priority.

The Port’s bond issue comes on the heels of a rating of A3 from Moody’s Investors Service (Moody’s) and a rating of A- from Standard & Poor’s (S&P).

David Moffett, an investment banker with Jefferies LLC, said his company is underwriting the bond sale. “The order period for bonds will begin on Wednesday morning at 8:30 a.m. CST and continue for about two hours, or until it is sold entirely. The revenue bond sale will close on Dec. 4 and investors will begin accruing interest at that time,” he said.

Southwest Louisiana residents will be given order priority to invest in the bonds, Moffett said. “Area residents will have the first opportunity to invest in the community.”

Bonds will be available in denominations of $5,000, and interest will be paid semi-annually. Bank of America Merrill Lynch and Morgan Stanley are the selling group members. Certain bond maturities will be exempt from federal and state income taxes, while others will be subject to the Alternative Minimum Tax (AMT).

Bonds may only be purchased through a broker and through a final Official Statement. Potential investors are instructed to contact Bank of America Merrill Lynch at 337-491-0700, Morgan Stanley on Lake Street at 337-479-7610 or Morgan Stanley on Pujo Street at 337-439-9461.

The rating agencies referenced the Port’s prudent liquidity and expense policy, the expected effective management of the Port’s capital program, and the announcement of several projects that will be located on Port property as key factors to receiving the favorable bond ratings.

Within the past 24 months, projects totaling almost $50 billion have been announced by companies planning to do business in the area, with many of those projects locating on Port property. Among those companies are Sasol North America, Trunkline LNG, Golden Nugget Casino Resort, Lake Charles Clean Energy, Sempra Energy, IFG Port Holdings, Magnolia LNG and G2X Energy. Initial reports from these companies estimate the projects will create nearly 18,000 construction jobs and 14,000 additional direct and indirect jobs.

The Port finished the 2012 fiscal year with nearly $34 million in operating revenues and nearly $14 million in Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), a measure of the Port’s operating cash flow.

“The Port of Lake Charles’ forward-looking management team and visionary board of commissioners gives us an advantage in the market,” said Rase. The U.S. Army Corps of Engineers recently ranked the Port of Lake Charles as the thirteenth-busiest port in the nation, based on cargo tonnage.

“The funds will be backed by monies the Port has in secure revenue from companies operating here. The bonds will not be dependent on a tax,” said Rase. “This will allow the Port to build two new docks and complete many other capital projects, which we expect to generate even more revenue and lead to the creation of more jobs.”

The $40.5 million bond sale is the first issue since the Louisiana State Bond Commission in October approved up to $100 million in Port bonds. The proceeds from these bonds will fund part of the Port’s $227 million capital improvement plan.

Future bond issues will be determined by further needs for improvements caused by industrial growth in the region.

 

Work starting on $70 million Lake Area employee village on port property

Posted on: November 13th, 2013
A private company broke ground Tuesday for a $70 million housing facility it plans to build on port property to meet the area’s projected workforce demands.

The construction of the temporary employee village, named Pelican Lodge, is expected to bring in 400 jobs. But once completed, in mid-2015, it could be home to as many as 4,000 construction workers.

In June, the Port Board unanimously approved a lease option agreement. Bill Rase, port executive director, said efforts like these “put Southwest Louisiana on the map” internationally.

Over the next five years, more than 15,000 construction jobs are expected to come from the more than $47 billion worth of investments in Southwest Louisiana.

“In order for these projects to be successful we have to have a place for workers to stay that is similar to home,” Rase said. “It’s not just a boarding house.”

Details of the plans, which include a baseball field, basketball courts and several different dining options, were first released in April.

Greenfield Logistical Solutions of Louisiana LLC will build the facility on 200 acres of port land at 1100 James Sudduth Parkway. Sammy Pate, project manager and partner with GLS, said the housing is so much more than a “traditional man camp.”

The plan includes daily meals and transportation to and from work for residents. GLS is looking at having five double-decker buses that can transport 80 people per bus. That will be 80 fewer cars per bus on the road going to the various sites, Rase said, adding rent will be $130 per day.

Through the lease agreement, the port is set to make $360,000 per year, as well as a percentage from the number of “heads on beds,” Rase has said. The port will get a dollar a day for each resident. At full capacity, Pelican Lodge could mean an additional $1.46 million a year for the port.

Unit fabrication will be done in Houston, and the facility will be set up in Lake Charles in three phases.

Pate said solidification of the project comes on the heels of collaborative efforts by the Southwest Louisiana Economic Development Alliance, Sowela Technical Community College, McNeese State University, state legislators, the port, the parish and the city of Lake Charles.

By Lance Traweek, American Press

New Ship Unloader Crane at Port of LC

Posted on: November 8th, 2013

Lake Charles, LA—The Port of Lake Charles installed a new ship unloader crane at BT-1, enabling an increase in its cargo capacity and handling efficiencies. BT-1 now has two unloaders that can operate at the same time.  For example, when discharging cargo from a ship, one crane will be used to place the material onto a conveyor belt, while the other will be able to simultaneously unload the cargo directly from ship to truck.

The Port contracted Morris Material Handlings of Wisconsin to manufacture the ship unloader. “This project was uncommon in that 90 percent of the crane and its components are being manufactured and constructed in the United States, because most of manufacturers for this type of crane are overseas,” says Donald Brinkman, Director of Port Engineering. “Even more exciting is that the ship unloader was fabricated right here in Louisiana.”

The crane is approximately 174 ft. tall and weighs approximately 900 tons. The total project cost was an estimated $14 million, which favorably impacted the New Iberia and Louisiana economies.

The ship unloader was fully assembled and tested at the Port of Iberia then shipped by barge to the Port of Lake Charles.

The Port of Lake Charles encompasses 203 square miles in Louisiana and owns and operates two marine terminals and two industrial parks. It is currently ranked the thirteenth-busiest seaport district in the U.S. based on cargo tonnage according to the U.S. Army Corp of Engineers. For more information on the Port of Lake Charles, contact 337 439-3661.

State Bond Commission approves Port of LC Revenue Bonds

Posted on: October 17th, 2013

The Louisiana State Bond Commission on Thursday morning gave its approval for the Port of Lake Charles to issue up to $100 million in revenue bonds.

According to Michael Dees with the Port of Lake Charles, the funds are not supported by tax, and will instead be backed by monies they already have in secure port revenue.

Since the port will be using its own money in fees, it has already collected from the companies operating there, the bonds will not be using any public money and therefore will require no voter approval.

The bonds will allow the port to build two new docks and complete other capital projects which is expected to generate even more revenue and lead to the creation of more jobs.

Jason Duke/KPLC-TV

More Jobs Predicted for LC

Posted on: October 17th, 2013

A state economist forecasts the Lake Charles metropolitan statistical area to add 3,300 jobs in 2014 and 4,500 more jobs in 2015 — an increase of 8.1 percent in two years.

Loren Scott gave an optimistic outlook for the area during his annual report to business leaders on Wednesday at the Southwest Louisiana Entrepreneurial and Economic Development Center.

“No other MSA in the state is expected to come close to this growth rate,” Scott said in his report. “Sometime in 2014, Lake Charles should surpass its previous peak reached back in 2008 and begin to set new employment records. In fact, we project that in 2015 this MSA will break through a barrier which has been seemingly illusive since the mid-’90s — over 100,000 employed.”

The promising outlook is attributed to the looming $46.6 billion worth of industrial expansions for the area. He said LNG export facilities are the driving force in investments.    He said the one cause for concern is finding enough workers. He expects the number of workers needed to rise from 6,000 to 14,000 by 2017 — the peak time for construction.    Scott posed the question: “Where are you going to get 8,000 new people?”

He commended efforts by Greenfield Logistics Solutions, which leased land from the Port of Lake Charles to build a $70 million “man camp” on 200 acres.

“I’ve been coming here for a lot of years, and I’ve never seen numbers like these,” Scott told business leaders. “It’s a scary thing to forecast numbers this big.”

He said that unless there is a large increase in natural gas prices, the Lake Charles MSA should be the “shining light” in the state’s economy in the coming years.

Scott also said the only thing holding the Lake Charles MSA back is the sluggish national economy.

“This has been the worst recovery that we’ve had since World War II,” he said.    Scott said the issue with the nation’s recovery is the federal government “raising tax rates and increasing regulations.”

By Lance Traweek/American Press

Port of Lake Charles Provides Update on Various Projects

Posted on: July 18th, 2013

In a year of worldwide economic uncertainty, the Port has continued to grow and achieve financial success. The financial results for 2012 show almost $34 million in operating revenues and nearly $14 million in EBITDA, a measure of the port’s operating cash flow.

How has the Port of Lake Charles been able to stay on such a steady and successful course through such a shaky economy? The port continues to keep cargo flowing, begin new projects, complete a series of infrastructure improvements, and bring in new business—creating jobs and spurring a convoy of economic development.

Find out more in this insightful Community Update Powerpoint Presentation.

GLS to build a workforce housing project on port property

Posted on: May 15th, 2013

Greenfield Logistical Services (GLS) of Louisiaana plans to build a workforce housing project on port property. GLS will invest approximately $70 million in the development of the workforce housing project, and the company will lease the site from the Port of Lake Charles. The Port will not fund the development but is in support of the project.

For more information on the workforce housing project, download the fact sheet.

Port of LC to Lease 108 Acres to Magnolia LNG

Posted on: March 13th, 2013

Port of Lake Charles Commissioners on Wednesday approved an option for a long-term lease agreement on 108 acres with Magnolia LNG, an Australian-based energy company that plans to build a $2.2 billion export facility that will produce 4 million metric tons of liquefied natural gas per year.

Magnolia LNG will be located adjacent to Calcasieu Point Landing on the Industrial Canal and across from the 200-acre G2X Energy site. Construction is expected to begin in 2015, pending construction and federal permits.

Maurice Brand, Magnolia LNG managing director and joint chief executive director, said the project will create 70 to 80 new permanent jobs and an estimated 400 construction jobs.

“The Port of Lake Charles has been able to provide a unique combination of location, infrastructure and transportation capabilities to help bring this project to the region,” Port Executive Director Bill Rase said in a news release. “Magnolia LNG will be a significant and welcome addition to Southwest Louisiana’s energy corridor. The port’s staff and board of commissioners look forward to doing business with the company.”

The Port of Lake Charles encompasses 203 square miles in Louisiana and owns and operates two marine terminals and two industrial parks and is the fourteenth-busiest seaport district in the U.S. according to the U.S. Army Corp of Engineers. For more information on the Port of Lake Charles, visit www.portlc.com or call 337-493-3513.