Sauget Terminal Will Be Key Ethanol Facility

By Rachel Melcer, St. Louis Post-Dispatch

Apr. 27–A rail, river barge and truck transportation facility is being built in Sauget to help the booming ethanol industry move millions of gallons of fuel from the corn belt, where it is produced, to markets that can use it.

Gateway Terminals LLC will spend $12.5 million on the renewable fuels terminal, which should be completed by the second quarter of 2008.

Gateway is a new joint venture, two-thirds owned by SCF Agri/Fuels LLC, a unit of SCF Marine Inc. of St. Louis. SCF Marine is part of inland barge giant Seacor Holdings Inc. of Fort Lauderdale, Fla.

The other third is owned by Eagle Marine Industries LLC, a barge fleet and bulk transportation company based in Sauget.

Alton & Southern Railway Co., an East St. Louis-based switching railroad owned by Union Pacific, will provide trains capable of moving nearly 2.8 million gallons of ethanol at a time.

It is a sign that the Midwestern ethanol industry is maturing “” and facing a new set of challenges, experts said.

“They need to improve their infrastructure. The Midwest market is going to be saturated with ethanol if we get as much capacity in production as we think we’re going to get. (So) you need to be able to ship it out,” said Seth Meyer, an assistant professor with the Food and Agricultural Policy Research Institute at the University of Missouri-Columbia.

In the next couple of months, U.S. ethanol production will top the amount federally mandated for use as a replacement for MTBE, a gasoline additive found to contaminate groundwater.

Once that happens, ethanol will have to compete on the open market with gasoline to win customers on the coasts, said Rick Tolman, chief executive of the Chesterfield-based National Corn Growers Association. And that means transportation costs will have to be lowered.

Chris Allen, vice president of development with Eagle Marine, said the Sauget terminal will be the fourth in the nation able to move trainloads of ethanol.

Dedicating an entire train to a single product, loaded at one facility, improves efficiency and leads to lower shipping costs than simply adding a few cars of ethanol to a freight train making multiple stops and facing lag times, said Mike McCarthy, Alton and Southern’s general manager.

Trains will bring ethanol from producers to Gateway, where it could be stored in one of five 98,900-barrel capacity tanks being built as part of the terminal. If a buyer is found to the east or west, other trains will ship it out.

If a buyer is found along the Mississippi River or abroad, however, it will be moved out by barge.

SCF Marine is involved with oil and gas businesses around the world, so the Gateway project “is a natural addition for us,” said President Tim Power. “A need in the alternate fuel markets for a facility like this was the driving force” behind SCF’s decision to build it.

Trucks, too, have a role to play at the Gateway terminal. They make the most sense for small, regional shipments because rail and barge shipping is less expensive over long hauls, Allen said.

Gateway is in the process of lining up customers and partners, he said. It is talking with Center Ethanol Co., which is building a $100 million ethanol plant adjacent to the Gateway terminal, as well as other ethanol facilities and major agriculture, oil and gas companies.

Allen said the terminal could eventually load three to five 1.26-million-gallon barges and 20 unit trains a month, which would equal a monthly capacity of up to 62.3 million gallons of ethanol. And that doesn’t include the capacity of its four-bay truck loading operation.

Gateway also is eyeing shipments of biodiesel, typically a soybean-based renewable fuel.

However, that would come later, perhaps when a biodiesel plant is built in the neighborhood, Allen said.

Tolman said the ethanol industry’s growth is prompting transportation companies to take it more seriously.

Gateway’s intermodal approach “makes a lot of sense to me,” he said. “It’s endemic of the fact that biofuels are real, they’re here and they’ve come into their own.”

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