Ethanol Shipping Fuels Worries

A small strip of land at Milwaukee’s port has become a point of controversy now that an energy company wants to ship ethanol from there.

U.S. Oil, a terminal operator, marketer and distributor of fuels and renewable energy products and a subsidiary of U.S. Venture Inc. headquartered in Appleton, operates a terminal on Jones Island that stores canola oil and biodiesel and transports it via train and truck.

Representatives from the company went before the Common Council’s Public Works Committee Wednesday seeking an amendment to their lease allowing them to secure land, about .8 acres, to build a small pipeline between their Jones Island terminal and the liquid cargo dock at the Port of Milwaukee, thus allowing them to ship cargo from the port.

“The primary cargo that we’ve been looking at for a number of years is ethanol,” said Richard Sawall, director of business development for U.S. Oil. “Wisconsin has a very strong ethanol industry and it’s an export market for the state. So we’ve always looked at Jones Island as an outlet for that product, for international markets primarily.”

But citizens and aldermen raised concerns about the increased traffic of ethanol, federally classified as highly hazardous and flammable, into Milwaukee, as well as the possibility that the small project could turn the city into a hub for transporting crude oil and other fuels through the Great Lakes and St. Lawrence Seaway. Underlining all their concerns is the fear of a spill or accident and the danger it poses to local residents and the environment.

The measure was approved unanimously, though not without pointed reservations by committee members, and next goes to the full council.

The original lease was approved by the council and signed by the Mayor Tom Barrett in 2014. In that lease, the city agreed to allow U.S. Oil access to the water shipment terminal. But at the time there was no agreement in place as to how they would gain access or for what cargo.

Sawall said that denying the lease, and thereby access to the lake, could constitute a breach of contract allowing them out of their 10- year lease. An attorney for the city corroborated this reading of the language.

“We’ve invested millions of dollars in improving that asset,” Sawall said.

Aldermen Nik Kovac and Jim Bohl voted for approval of the amendment but objected ethically to the project.

“At this point, I think our back is to the wall in terms of the overall lease,” Bohl said. “I may wind up not supporting it and abstaining or doing something else at council.”

U.S. Oil operates three other port terminals on the Great Lakes, one of them in Green Bay. If the pipeline is built, the company has a 60,000-barrel barge they would use to transport liquid cargo, like ethanol, on the Great Lakes. One barrel is 42 gallons, so their barge holds about 2.5 million gallons.

The U.S. Oil terminal essentially acts as a rail and truck terminal on Jones Island right now, but is mostly used for storage. Sawall said the current volume is “not rateable” as it varies from month to month, but, “Average, you’re talking a couple trucks a day.”

Sawall said this terminal held ethanol years ago. And U.S. Oil has already been given a permit by the Department of Natural Resources for ethanol at the Jones Island terminal, said Chris Gray, the project engineer, so they could store ethanol now, but currently do not.

Concerns abound over project?

Kovac noted that once U.S. Oil starts transporting ethanol, using their pipeline to the liquid cargo dock, they would be able to also start transporting crude oil with proper permitting from state and federal agencies.

Kovac said he had faith in the employees of the permitting agencies like the Environmental Protection Agency and the DNR, but questioned state and federal leadership of them.

“I say this in all seriousness, (as to) the federal and state government protecting us in is the permitting process, I have a lot less comfort in the state since 2010 and a lot less comfort in the country since 2017,” he said. “Our lease here is perhaps our main lever of environmental control.”

Kovac also noted comments made by Sawall to trade journals about U.S. Oil using its Jones Island terminal to ship crude oil.

A story in the January/February 2015 issue of Canadian Shipper  read, “U.S. Oil is considering the Jones Island terminal at the Port of Milwaukee” to ship Canadian crude through the Great Lakes and St. Lawrence seaway.

Another report from Canadian Sailings on March 16, 2015 attributed a description of the potential operation to Sawall saying, “Jones Island would receive crude via rail in volumes ranging from 5,000 to 60,000 barrels.”

But Sawall told the committee it was “unlikely” his company would ship crude oil out of Milwaukee’s port if it had other business like ethanol, saying the market for shipping crude oil is less lucrative then for shipping ethanol.

“I don’t think it’s crazy to think that they’re gonna come back with crude, just based on Mr. Sawall’s previous comments,” Kovac said, and “if the federal government stops subsidizing ethanol, which I think is not an unlikely scenario.”

As long as there has been a capital investment in infrastructure like a pipeline, firms will use them, Kovac said.

“Infrastructure is destiny,” he added, “a concept made famous in the movie we’ve all seen, Field of Dreams — ‘If you build it they will come’.”

Eric Hansen, of Citizens Acting for Rail Safety, said his organization is seriously concerned about the safety and environmental risks associated with an increased volume in hazardous materials that would be trafficked into Milwaukee via truck or rail if the pipeline is built.

“We seem to be setting up a magnet for high hazard, flammable material,” he said.

Hansen said he wants more public discussion about what Milwaukee’s position should be before it accepts that more hazardous materials will be brought into the city, in light of potential derailments or accidents during transport to the Jones Island terminal. The freshwater in Lake Michigan is a natural resource for Milwaukee, Hansen said, and leaders should think twice before potentially endangering it.

According to Don Johnston, director of environmental quality for U.S. Venture, the parent company of U.S. Oil, the ethanol that would be handled in the Jones Island terminal is “denatured ethanol” which is 95 percent ethanol and five percent natural gasoline, “basically a condensate of natural gas,” Johnston said.

In the event of a spill, the ethanol would dissolve into the lake water and sap the oxygen from the immediate area, killing plant and animal life. The natural gasoline would form a “sheen” on the surface water

Johnston said the company does have a disaster plan in place for any spill or accident that happens at their terminal. He said they work closely with and donate to the Milwaukee Fire Department so that they have the necessary equipment on hand for an ethanol fire. Their plan for responding to a spill in the lake includes containing the natural gasoline sheen with booms and collecting it with skimmers.

“Damage should be minimal,” Johnston said.

An attorney for the city said the company would be liable for an event like that, and that their lease stipulates that they carry a $2 to $4 million insurance policy.

Committee member, Ald. Robert Bauman, maintained that this hearing was not the place to mete out discontent with the shipping of hazardous materials, as it is simply a land deal.

“You can’t stop the petroleum industry at this council meeting,” he said.

Bauman also said the transport hazard by truck or train is beyond the scope of U.S. Oil’s jurisdiction, as they use third parties for that transport.

Bohl noted that transport routes like this are regulated by the state’s Department of Transportation, but said his confidence in the department has been reduced, adding “They are continuously defunded by state government as well.”

Bauman said he too has concerns about petroleum products, but also made the case that fuels are in demand and need to be transported somehow.

“And frankly, we need a little dose of reality here,” he said to the rail safety advocates, “maybe we should limit testimony to everyone who came here on foot or on horseback.”