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HomeMy WebLinkAbout2008-01-16 Bulk Fuel Committee Meeting Meeting Minutes January 16,2008 The informal meeting began at 8:40 A.M. with the following Committee members present: Whitey Willauer, Brian Chadwick, Dual Macintyre, AI Peterson and E. Foley Vaughan. Also present were Libby Gibson, Town Manager, Malachy Rice Assistant Town Manager, Janine Torres, Administrative Assistant to the Airport Manager and John Stackpole, President of Harbor Fuel. To avoid future confusion, Mr. Willauer noted future meetings will be posted by the Selectman's Office due their close proximity to the Town Clerk's office. Mr. Willauer explained the purpose of the meeting was to determine where to go from here, if anywhere. The idea of a single point mooring off the South Shore no longer seemed cost effective. The competitive environment must continue to be present. How much and what kind of fuel to be stored needs to be determined. John Stackpole reported Harbor Fuel tries to maintain a 5 to 7 day supply of fuel on hand to cover delivery delays. This amounts to approximately 40,000 gailons a day. In addition, Harbor Fuel is under contract with the Electric Company to maintain a fuel supply for their use exclusively; and, while that amount is not as high as it used to be, the Electric Company no longer has their own storage tanks forcing Harbor Fuel to store that as well. Harbor Fuel total storage capacity is close to one million gallons. Mr. Stackpole explained their barges carry up to four products at once and each is supplied from a different port including New Jersey and New York. The delays in New York Harbor can be substantial requiring new orders to be placed as soon as a delivery is made. The supplier likes to get orders three weeks in advance and barges can take up to a week to deliver making the ordering process a challenge. Mr. Stackpole, when asked, noted Harbor Fuel would be more on board with this project if they were not tied into a lease with First Winthrop. He added if they owned their own tank farm, their business would be run very differently. The topic switched to the lease with First Winthrop. There are conflicting reports as to First Winthrop's willingness to release Harbor Fuel from the lease which expires in 2018. It was determined this is the first obstacle to get over. Mr. Chadwick asked Mr. Stackpole how many truck loads it would take to empty one of their barge shipments to which Mr. Stackpole replied between 30 and 40 trips (10,000 gallons per truck load). Mr. Chadwick questioned whether the Steamship would allow a barge to dock at their facility. Mr. Stackpole didn't think the Coast Guard would ever allow transferring from a barge to a truck. Mr. Peterson interjected this would also mean an additional fuel exchange, adding both risk and cost. It was determined if a tank farm was built out of town the only option to getting the fuel to the tanks would be via truck. However, it is estimated this would take an additional 700 to 1000 truck trips per year. -j Q g "IIi(~.';"" ,":':' ~ ::0 ~ 5'7 ::z::, 25 Bulk Fuel Committee Minutes 1/16/08 Page 2 of3 Mr. Chadwick reminded the group that Nantucket has "overstayed their welcome with Barnstable in respect to trucking. Mr. Peterson noted we have not fully examined New Bedford as the ferrying point. Mr. Stackpole interjected one of the reasons trucking petroleum is so expensive is because the delivery trucks are tied up all day traveling to Nantucket as opposed to making several deliveries a day. Mr. Vaughan asked if anyone thought of the economics of the Town buying its own boat. The downside of this idea is the tankers travel back empty. When asked by Mr. Willauer what the best solution he could visualize was, Mr. Stackpole said he saw it in two different ways. The first is to re-visit the downtown area and upgrade the existing terminal. This would allow the more cost effective barging. Secondly, considering the amount of product needed, he sees the out-of-town tank farm as a good idea. Although it would require trucking through downtown, the liability of barging into the harbor would be reduced. Mr. Stackpole added First Winthrop's engineers did a study on relocating the tank farm to Electric Company land using underground tanks called New York boxes. After a year, the project died after a deal could not be finalized with the Electric Company. Mr. Peterson asked if any more thought had been given to the organization of how to run this project both in locality and funding. Ms. Gibson asked if the tank farm is moved out of town, how the current situation changes in remaining competitive. The answer being whoever provides the capital will want a return on their money. Ms. Gibson reiterated the lease issues with First Winthrop and the need to know where they stand. Mr. Stackpole suggests the first step should be starting the permitting process and determining how long to build and make the tank farm operational noting it could take several years bringing the lease 2018 expiration date closer. Mr. Vaughan added a preliminary step needs to be comparing Harbor Fuel's cost currently, including rent, to what that cost might be if the fuel is transported out of town. Mr. Willauer summarized the next steps to be 1) talking to First Winthrop, 2) determine the economics by having someone analyze the various financial alternatives, and 3) create a timeline; explaining these components would enable decisions to be made like the size of the operation. Mr. Peterson interjected Ascent's study had already done some of the work indicating it would cost approximately $11 million of capital for a 1 million gallon tank farm. Mr. Macintyre noted Leo Roy of VHB reported at the last meeting the funding mechanism called a TIP (Tax Increment Financing) or in Mass. a DIP (District Improvement Financing) where the Town would pledge the increase in tax revenue on the redeveloped existing tan farm land to help pay the debt on the new tank farm borrowings. The subject turned back to the freight boat and what would be the restrictions if a boat was chartered. How many trucks can fit? Would it require a cab and driver to accompany? Could ISO containers be used? Mr. Macintyre suggested adding talks with Steamship Authority as a next step. Bulk Fuel Committee Minutes 1/16/08 Page 3 of3 Mr. Peterson was asked to set up a meeting with First Winthrop which will include Mr. Willauer and Mr. Vaughan. Mr. Willauer and Ms. Gibson will meet with Powers & Sullivan, the Town's accounting firm, to review bonding options and well as discuss the DIP option. Mr. Peterson mentioned he would ask Ascent about ISO containers. The next Bulk Fuel Meeting was scheduled for February 12, 2008 at 8:30 a.m. Meeting adjourned 9:30 a.ill.