# Presentation: 810270

## Deep-Draft Channel Projects Corps of Engineers Analysis– Issues 

**Transportation Cost Analyses**
**Refinery Infrastructure Considerations**

**Notes:**

Good Afternoon.  I’m delighted to be here !  During my time, I want to acquaint you with the Corps of Engineers role in regard to waterborne commerce

## My Role with the Corps

- Corps of Engineers District Office in Galveston, Texas
- Economic Evaluation and Determination of Federal Interest in Waterway and Channel Improvements (Channel Dredging Projects).

**Notes:**
I work for the Galveston District Corps of Engineers as a Regional Economist.
The EIA contacted the Corps of Engineers main office in Washington DC asking for participation in today’s conference.  
The EIA wanted input from the Corps on how the Corps evaluates refinery infrastructure in our navgation planning studies.  
The Corps Washington Office asked if I would represent the Corps.

## Organization of Corps 

- The US Army Corps of Engineers Headquarters is made up of made up of an Executive Office and 17 Staff Principals. The Headquarters, located in Washington, DC, creates interprets, and enforce policy and plans future direction of all the other Corps organizations.
- The workforce of the U. S. Army Corps of Engineers (USACE) consists of 98% civilian & 2% military personnel.
- The Corps is involved in civil works and military support.

**Notes:**
The US Army Corps of Engineers Headquarters, which is located here in Washington, consists of an Executive Office and 17 Staff Principals. 

Corps Headquarters is responsible for defining policy and plans future direction of all the other Corps organizations.

 The United States Army Corps of Engineers is made up of approximately 34,600 civilian and 650 military men and women.
98% CIVILIAN                    2% MILITARY

## Division Alignment

***Pacific Ocean ***
***Division***

***S******outhwestern***

***South ***
***Atlantic***

***South Pacific***

***Mississippi***
***Valley Division***

***North***
***Atlantic***

***Great Lakes and***
***Ohio River Division***

***Northwestern***

**Notes:**
The Corps is organized geographically into 8 divisions in the US and 41 subordinate districts throughout the US, Asia and Europe. The districts oversee project offices throughout the world. Divisions and districts are defined by watershed boundaries, not by states. 

## Divisions and Districts 

- The Corps is organized geographically into 8 divisions in the US and 41 subordinate districts throughout the US, Asia and Europe. The districts oversee project offices throughout the world. Divisions and districts are defined by watershed boundaries, not by states.

## Project Missions

**“**_**High Priority” Missions**_**:**
-   **Flood Damage Reduction**
-   **Commercial Navigation**
-   **Ecosystem Restoration**

**Erosion/Hurricane Protection**

**Flooding**

**Navigation**** **

**Environmental Infrastructure Needs**

**Water Supply**

**Lock / Dam Replacement -  **
** ****Inland Waterways System**

**Salmon Mitigation**

**Port / Harbors**

**Environmental Infrastructure Needs**

**Environ. Restoration**

**Wetland Losses**

**Letter to Corps District Office**

**Notes:**
•Planning, designing, building and operating water resources and other civil works projects (Navigation, Flood Control, Environmental Protection, Disaster Response, etc.) 
•Designing and managing the construction of military facilities for the Army and Air Force. (Military Construction) 
•Providing design and construction management support for other Defense and federal agencies. (Interagency and International Services) 

## Corps / Civil Works Mission

- Planning, designing, building and operating water resources and other civil works projects (Navigation, Flood Control, Environmental Protection, Disaster Response, etc.)
- Designing and managing the construction of military facilities for the Army and Air Force. (Military Construction)
- Providing design and construction management support for other Defense and federal agencies. (Interagency and International Services)

## Purpose of Presentation

- General Overview of Corps Navigation Economic Evaluation Procedures
- Outline Criterion for Determining Federal Interest in Navigation Projects

**Notes:**
My purpose is to provide a general overview of Corps evaluation procedures
And
Outline the criterion for determining Federal Interest

## Application to EIA

- The Corps often uses or considers the Dept. of Energy (DOE/EIA) forecasts, along with site specific trend data, and other published forecasts for our project specific port and waterway studies and general channel improvement evaluations.

**Notes:**
The Corps uses and evaluates EIA forecasts and trend data.
As part of our regional studies and associated requests to participate in determining whether the Federal government should recommend and provide financial support in the form of Tax Dollars for Channel Deepening and Widening and general port associated modifications.

Texas Port Studies: channel deepening and widening; general navigation.  

The Galveston District geographical area of responsibility includes the entire coast of Texas.   Channel Improvement evaluations are underway for
CORPUS CHRISTI	BEAUMONT/PT ARTHUR
TEXAS CITY  	FREEPORT
UNDER CONSTRUCTION:  HOUSTON SHIP CHANNEL

## Navigation Project Initiative

**Port Authority through their congressional representative asks the Corps to evaluate waterway improvements.**

## Examples of Waterway Improvements that the Corps is involved with

- Channel deepening or widening.
- Anchorages
- Turning Basins
- Locks and Dams
- Harbors of Refuge
- Protective Jetties & Breakwaters

## Examples of Project Features NOT in the “Federal Interest”

- Not in the Federal Interest is Defined by Corps Policy and Regulations.
- Docks
- Terminal & Transfer Facilities
- Berthing Areas
- Local Access Channels

## Congressional Study Resolution / Authorization

**Senate Resolution**

**Civil Works Project Delivery - “An Overview”  **

- WRDA Bill

**House Resolution**

_**Authority - Congress**_**!**
**  ****Study Resolutions**
**  ****WRDA Bills**
**  ****Standing Authorities**
**  *****Appropriations Bills*****  **

***OR***

**- Signed by President**

**Transportation & Infrastructure Committee**

**Environment & Public Works Committee**

**Member**

**( Step 1 )**

**Passage**** ~**** 2-yr. Intervals**

**Have we studied the problem before?**

## The economic merits of Civil works projects are primarily measured against the Federal Objective-- 

## Federal Interest in Navigation

- Commerce Clause of the Constitution, and subsequent court decisions, defined the right to regulate navigation and waterway improvements establish the Federal interest in navigation
- Navigable waters facilitate commercial transportation in support of interstate and foreign trade.

**Federal Interest ****in Navigation**

## The Federal Objective of water and related land resources project planning is to contribute to NED consistent with protecting the Nation’s environment, pursuant to national environmental statutes, applicable executive orders & other Federal planning requirements.

## Determination of Federal Interest as it applies to Navigation

- Federal interest in a project depends on whether it provides benefits to the public by facilitating commerce.
- Determination of federal interest requires identification of public purpose and access.

## Determination of Federal Interest as it applies to Navigation (continued)

- Federal Projects must be open to public use for the project purposes.
- For navigation projects, the access required is at least one location with the vessel services needed to achieve project benefits.

## General Example of a Navigation Project Initiative or Request

- Existing Channel Dimension:
- 40 feet deep by 400 to 500 feet wide
*Sponsor (example might be a port authority) asks the Corps to evaluate channel depths up to 50 feet; along with channel widening.*

## Water and related land resources project plans shall be formulated to alleviate problems and take advantage of opportunities in ways that contribute to the National Economic Development (NED) objective.

## Contributions to National Economic Development (NED) are increases in the net value of the national output of goods & services, expressed in monetary units.   

## Principles and Guidelines (P&G)

- P&G were established pursuant to the Water Resources Act of 1965 (Pub. L. 89-80), as amended (42 U.S.C. 1962a-2 and d-1).
- P&G is intended to ensure proper and consistent planning by Federal agencies in the formulation and evaluation of water and related land resources implementation studies.

## Federal Water Resource Project Planning:  Principles and Guidelines (P&G)

**Federal Water Resource Agencies**
- Corps of Engineers (Civil Works)
- Bureau of Reclamation
- Tennessee Valley Authority
- Soil Conservation Service

## Examples of Typical Vessel-Draft Constrained Commodities at U. S. Ports

- Crude Oil & Petroleum Products
- Bulk Grain
- Container / General Cargo

## Planning Constraints (may include)

- Financial / Limited Budget
- Trade Route Limitation
- 	(Panama Canal; Channel Depths)
- Logistical Variables
- (i.e. refinery capacity, infrastructure, pipeline networks, land side limitation; and other general water & land interface variables.

## Data Analysis Trends

- Foreign imports of crude petroleum and products have replaced domestic production for both the U. S. and the Gulf Coast.

## General Evaluation Considerations

- Analysis of vessel sizes and associated loaded drafts by commodity groups
- Review commodity Origin-to-Destination Routings.
- Primary emphasis historically has been on identifying % of movements that have the potential to be shipped in vessels at deeper depths

## Evaluation Considerations

**Port Depth Constraints**
**Trade Route Constraints**
**Vessel Size Utilization / Limitations**
**Evaluation of Offshore Lightering Costs**
**Cost of Channel Improvements (channel deepening, widening, environmental mitigation cost, & channel maintenance cost) on a life-cycle basis.**
**General Navigation Features.**

## U. S. Crude Oil ImportsOffshore Lightering

## Channel Depth Constraints

## Identification of Trade Route Constraints & General Data

- General Data Sources:
- Lloyds of London:  Ports of the World
- Fairplay Vessel Registers
- Many internet links
- Journal of Commerce
- Waterway Journal

## Reoccurring Issue for Texas Gulf Coast Channel Improvement Projects

- Refinery Capacity *
- Texas Gulf Coast petroleum refineries are operating at 93.4% of capacity for crude petroleum and products
- Louisiana Gulf Coast refineries are at 98.9%.
- Source: U. S. Dept. of Energy, Petroleum Supply Annual, Volume 1, p. 49.

## Project Evaluation Considerations for Navigation Planning

- Confirm vessel operating practices and ship size choices and determine the sensitivity of the project benefits to variable changes.
- Determine the sensitivity of project benefits and project construction cost.
- Determine effects of channel widening on vessel delay occurrences and frequencies.
- Identify changes in vessel distribution & demand.

## Effect of Refinery Capacity Expansions on Corps Waterway Projects

- Determine if refinery expansion is needed to accommodate expected throughput volumes.
- Cost of Refinery Expansion may need to be included in evaluation of and may be particularly important in comparison between Corps waterway improvements.

## Data Analysis Trends

- Comparison of 1980s series data with 1990/00 data slows an increasing move towards imports of not only crude petroleum but refined products

## 1975-2001 Petroleum Dispositionbarrels/daysource: EIA

## Data Analysis Trends

- Since the late 1980s, receipts of domestic crude oil to the U. S. Gulf from Alaska and California has declined.

## Data Analysis Trends

- Foreign imports of crude petroleum and products have replaced domestic production for both the U. S. and the Gulf Coast.

## Data Analysis Trends

- During the 1970s and early 1980s
- Most of the crude oil and products moved by water was associated with inland barges or coastwise movement between U. S. production/processing and consumption  regions.

## Data Analysis Trends

- During the 1980s, high volumes of Alaskan crude oil was shipped to U. S. Gulf Coast ports.  Oil went by ship from Alaska to Panama, where it was transferred by pipeline.

## Data Analysis Trends

- Comparison of decade interval data between 1981/00 and
- 1991/00 shows that product imports are up by over 70 percent.

## Data Analysis Trends

- The U. S. Gulf Coast leads the nation in refinery capacity.  The Gulf is nation’s leading supplier in refined products.  Products such as distillates or derivatives (gasoline, heating oil, diesel & jet fuel) are transported to the East Coast and the Midwest.

## Source: DOE/EIA Jan 2003

## U. S. Foreign & Domestic Waterborne Commerce millions of short tons Petroleum Products

## Corpus Christi, TX,  Foreign & Domestic Waterborne Commerce millions of short tons of Petroleum Products

## U. S. Petroleum Importsmillions of short tons

## Corpus Christi, TX Petroleum Importsmillions of short tons

## Beaumont-Pt. Arthur, TX Petroleum Importsmillions of short tons

## Atmospheric Crude Oil Distillation 1000’s of barrels, 1991-01

**Notes:**
Review of EIA statistical data shows that Capacity has increased but utilization rates are also up.
And the increase in utilization is what is of concern.
Terminal operators at the Texas Coastal Ports have expressed concern that they are operating at or near capacity.

## Waterborne Commerce 1961-2000 million of short Tons

## U.S. Waterborne Commerce1961-2000 & Average Annual Growth Rate

## MARAD: U. S.  Foreign Waterborne Trade (million of short tons)

| Port | 1998 | 1999 | 2000 | 2001 |
| --- | --- | --- | --- | --- |
| Houston | 98 | 95 | 109 | 118 |
| S. Louisiana | 60 | 71 | 77 | 75 |
| New York | 56 | 58 | 63 | 72 |
| New Orleans | 79 | 70 | 67 | 65 |
| Corpus Christi | 54 | 56 | 55 | 49 |
| Los Angeles | 30 | 33 | 40 | 42 |
| % of Total | 35% | 35% | 36% | 36% |
| All Ports Tons | 1075 | 1096 | 1158 | 1161 |

## U. S. Crude Oil Imports  millions of short tons

## U. S. Product Imports  millions of short tons

## U. S. Product Exports  millions of short tons

## U. S. Coastwise Movements  millions of short tons

## Identification of Traffic Problems (general steps)

- Talk with Vessel Pilots, Sponsor, Port & Industry Representatives.
- Determine the number of vessels and % of tonnage presently light-loaded (I.e. transported in vessels with design drafts greater than the channel depth.
- Talk with vessel operators and harbor pilots.

## Identification of Traffic Problems (general steps)

- Identify other sources of traffic problems (may include vessel meeting constraints due to channel width or unsafe bends)
- Determine trade route constraints
- Talk with sponsor, waterway users and vessel pilots, project engineers, environmental managers, obtain public input.

## Identification of Traffic Problems (general steps)

- Historic trends are assessed for the purpose of determining the commodity groups limited by the constraints of channel dimensions.
- Within the context of this framework, channel  constraints are defined to exist when some % of the tonnage currently or anticipated to be transported in vessels that cannot be fully loaded.

## U. S. Gulf Coast Example Trips by Vessel DWT, Length and Beam (ft)

| Vessel DWT | % Trips | LOA | Beam |
| --- | --- | --- | --- |
| <4000 | 1% | 253 | 47 |
| 4000 to 19999 | 6% | 436 | 65 |
| 20000 to 39999 | 23% | 602 | 90 |
| 40000 to 80000 | 17% | 677 | 104 |
| 80000 to 99999 | 46% | 795 | 136 |
| 100000 to 160000 | 8% | 831 | 140 |
| Total  | 100% |  |  |

## Evaluation Criteria Identification of Traffic Problems

- Identify range of potential solutions along with constraints
- Common constraints include:
- constraints are driven by costs,
-  environmental impacts & associated cost
- shipping constraints / logistical constraints
- Implementability / engineering feasibility

## Identify Vessel Traffic Problems

- Review recent historical traffic data
- Tonnage Volumes
- Vessel Sizes
- Identify tonnage shipped in draft limited vessels
- Identify trade routes associated with draft limited tonnage and shipping methods.
- Traffic density, intensity, and congestion.
- Identify channel depths at trading ports.

## US Gulf Coast Crude Oil Imports	World Fleet Forecast Group Projections source:  1998 McGraw-Hill/DRI data extraction	

## Planning Guidance

- The overall procedures used by the Corps for navigation planning project formulation and evaluation are contained in Engineering Regulation (ER) 1105-2-100.
- The ER outlines the requirements for conducting planning studies within the Corps of Engineers Civil Works Program.
- http://www.usace.army.mil/inet/usace-docs/eng-regs/er1105-2-100/toc.htm

## Crude Oil Cost/Ton by Channel DepthVenezuela to Beaumont, Texassample calculation for presentation

## Cargo Capacity by Vessel Size & Channel Depth (abbreviated example)

## Immersion Factor Application to Estimate Loaded Tonnage based on Vessel DWT, Design Draft and Channel Depth

## Cargo Capacity by Vessel Size & Channel Depth (abbreviated example)

## Number of Shuttles Offshore LighteringMother Vessel:  325,000 dwt. (abbreviated example)

## Texas Gulf Coast Port% Crude Oil Imports by Trade Route1998-2020 (compiled from Corps of Engineers & U.S. Dept. Commerce databases)

- <date/time>

**Texas Gulf Coast Port****% Crude Oil Imports ****by Trade Route****1998-2020 ****(compiled from Corps of Engineers & U.S. Dept. Commerce databases)**

## Evaluation Process

- - The focus of the economic analysis is now to confirm vessel operating practices and ship size choices and determine the sensitivity of the project benefits.
- -Determine the performance of selective channel
- widening and calculate the reduction in expected delays.

## Conclusions

- Refinery Capacity and Expansion Issues are important to the Corps in terms of comparison of channel improvement projects.
- The Corps needs to be aware of when improvements are needed and, when necessary, factor the additional cost of refinery expansion, as well as other logistical variables, into the evaluation.

## Conclusions

- Petroleum Import Growth and Demand data suggests that refinery expansions are likely needed.
- 48% of U. S. Crude Oil Refinery Input &
- 46% of operating capacity is concentrated in along the Texas and Louisiana Coast.
- General concerns about comparative analysis and the importance of multiport comparative evaluations.

## Slide 74