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Marathon Oil Invests $2.4M at Wellsville Intermodal Site
EAST LIVERPOOL, Ohio – Between 200 and 400 trucks a day will deliver the liquids of “wet” natural gas from the Utica shale to the four holding tanks The Marathon Petroleum Co. owns in the Wellsville Intermodal Facility.
From there the liquids will be loaded onto barges on the Ohio River and shipped to refineries.
First, however, Marathon must build a pipe linking the holding tanks, each with a capacity of 2.5 million gallons, to the docks where the barges will be loaded
To that end, the board of the Columbiana County Port Authority signed a memorandum of understanding Monday with Marathon. Under its terms, Marathon will pay the authority $2.4 million for 3.6 acres within the 70-acre industrial park. Under the memorandum, Marathon has the right, but no obligation, to purchase additional land within the industrial park that borders the 3.6 acres.
The benefit to the city of Wellsville, port authority CEO Tracy Drake noted, is the truck traffic need not pass through the city to deliver the liquids and the truck traffic will be 24/7. The section of state Route 7 the trucks will take needed to be repaired and upgraded, Drake said.
Think of the 3.6 acres as a large parking lot to hold the trucks as the drivers wait their turns to offload their cargos.
All items that required board approval Monday are related to the Utica shale, Chairman Steve Cooper observed.
With the approval of the port authority board, Arrowhead Utica Pipeline LLC assumed the lease of Rosebud Mining Co. had at Intermodal and extended it to 99 years, paying the port authority $5 million in advance for the life of the agreement. Arrowhead, expecting to work with Marathon, intends to build pipelines from the Utica shale to the industrial park and could spend as much as $40 million, Drake said.
The board also entered into a memorandum of understanding with Aqua Terra Asset Management LLC, that allow it to be the agent of the part authority and sell East Liverpool water to energy companies engaged in hydraulic fracturing, also known as fracking, the process that releases natural gas in a shale play to the surface.
Under the agreement, Aqua Terra, a subsidiary of Boenning & Scattergood Holdings Inc., will have the ability to sell water the city has treated for a minimum price of $9 per thousand gallons. East Liverpool would collect $6.46 of the $9, the port authority $1.50 and Aqua Terra $1. Drivers can fill their trucks at a hydrant on the property where the port authority has its offices, 1250 St. George St., or at the East End, Drake said. The city has an excess capacity of two million gallons per year it is prepared to sell.
Under the agreement, Aqua Terra is required to compile marketing materials, promote the sites and identify potential purchasers
Should additional demand develop, East Liverpool could also sell untreated water directly from the Ohio River for a minimum of $5 per thousand gallons, as the city of Steubenville is.
The port authority board agreed to pay W.R. Coles and Associates $31,000 “for professional services to investigate Pump Station #4” in the Intermodal park. The pump, used once since the early 1970s, needs to be replaces. It is used to direct flood waters back to the Ohio River and would help assure that the 3.6 acres Marathon bought for its trucks to offload liquids remains open.
The sale of the former Youngstown & Southern Railroad to Tervita, scheduled to close Monday, was postponed until Aug. 8 when the board of Tervita meets. The Tervita board needs more time to review the letter of intent signed April 5, Drake said. He fully expects the sale to go through. Tervita plans to use the short line that runs from Youngstown to Darlington, Pa., as part of its energy operations.
In his report to the board, Drake said that Cimbar, a Georgia-based corporation, will be the first entity in Columbiana County to take advantage of Foreign Trade Zone 181. Cimbar processes barite in the Intermodal park.
Barite is barium sulfate, a relatively inert mineral with a high density. It is used as a weighting agent in the drilling muds energy companies use to drill oil and gas wells.
Cimbar expects to grind up to 200,000 tons a year, Drake reported, after it competes setting it operations. By grinding the barite here rather than importing the mineral already ground, Cimbar will save $1 a ton in import duties.
Mark Bayless, a business representative of the Carpenters union present on behalf of the Western Reserve Building & Construction Trades Council, presented the port authority a plaque in appreciation for its use of union labor in developing the Intermodal industrial park. Bayless mentioned the 60-ton crane at the park and captive barge cells. Among the building trades participating were the carpenters, millwrights and pile drivers and ironworkers.
Copyright 2012 The Business Journal, Youngstown, Ohio.