Propane distributor to negotiate lease with port authority

The Little Rock Port Authority on Wednesday gave its executive director the power to negotiate a land lease with NGL Energy Supply Terminal LLC, a major propane distributor for the state. It would be the first new lease at the Port of Little Rock in more than a year.

Port Authority Executive Director Bryan Day said the deal also is significant because NGL eventually will use all aspects of transportation available at the port — rail, water and trucking. The port gets no public tax money; all its revenue is generated from leases and the tenants’ and landowners’ use of rail and barge.

“We are particularly interested in and looking for partners that are into the logistics business — that would ship things in or out on the river, that would bring things in or out on rail car, that would ship things in or out using the truck transportation system,” Day said Wednesday. “NGL does that.”

The port has extended and renewed leases, but NGL would be the first new lease since Day took over as executive director more than a year ago.

NGL wants a 7-acre tract of land on the river side of Industrial Harbor Drive, where it plans to build a small office and a field of large, aboveground storage tanks to hold liquid propane. The propane would arrive by rail from the company’s distribution facility in Tulsa, then get trucked wholesale to users all over the state. The company also hopes to incorporate the use of barges.

Although NGL deals in several categories of the energy industry, a company representative noted at Wednesday’s meeting that its operation does

about $2 billion annually, Day said.

Users include residents and farmers in the rural areas of Arkansas who use propane to heat their homes and to cook with, as well as for agricultural uses.

Day said NGL would provide a handful of jobs, but its initial capital investment is estimated at $1 million. The energy company also is interested in another 3 acres, although that property needs a cleanup before it can be leased, Day said.

“I get the sense that this basically becomes the main distribution point for the state,” Day said of NGL. “They’ll

be able to adequately store enough of this fuel commodity to meet the demand.”

Although propane is generally considered a wintertime commodity, the need for alternative fuels and the use of propane in agriculture are expected to create a need for it all year.

“They’d been looking for a couple of years for locations that had water access, were served by railroad and that were zoned industrial,” Day said. “We had everything they needed.”

Land at the port’s industrial park leases for an average of $5,000 to $6,000 per acre per year, Day said. Rail and barge use is what the port uses to calculate its return on investment. The port authority earns an

average of $300 for every rail car that is switched onto the port’s rail system. Officials expect NGL’s rail use to grow to 800 to 1,000 rail cars per year.

For use of the river and slack water harbor docks, the port gets about 9.5 percent of the value of the product being shipped. The formulation changes and can be negotiated based on the commodity and tonnage, Day said.

The port authority board also approved a resolution allowing Day to apply for a $142,000 Arkansas Port Intermodel and Waterways Development Grant, managed by the Arkansas Waterways Commission. The money would be used to make certain parts of the industrial park more secure. Improvements would include additional security fencing and a closed-circuit television system on all of the port’s warehouses and river terminals.

The upgrades would go toward the port developing and adopting a security plan, which is required by the U.S. Department of Homeland Security. With the plan, the port authority could pursue companies that handle product that requires a closer eye, such as certain chemicals, oil and other high-value commodities.

“Our hope is that this system we install will open up new markets for us and make us more competitive,” Day said.

The grant requires a 10 percent match from the port authority. The authority should know by December whether it is awarded the money.