Megaport

The North Carolina International Terminal

The North Carolina State Ports Authority has purchased a 600-acre undeveloped site on the Cape Fear River just north of Southport, and commenced plans to construct a very large marine container terminal, second in size only to the combined terminals at Port Elizabeth and Port Newark, New Jersey. The terminal is intended to accommodate a new generation of very large, deep draft container ships expected to call at East Coast ports after improvements to the Panama Canal in planned for 2014.

The project would cost over $4 billion. $1.2 billion of that is for the extensive dredging of the Cape Fear River that would be required. New highways and improved railroad connections also would be required.

The State Ports Authority has spent over $10 million in engineering and economic studies, but not a penny in tribute to environmental issues. Nor has there been any independent examination of the economics by State agencies without an interest in the outcome. On the pages linked below, Save the Cape provides environmental and economic analyses.  Although the project was put “on hold” in 2010, it reappeared in the State Ports Authority’s 2015 Strategic Plan as a subject for new studies.  Save the Cape will continue to gather information, and make all of that information available here.

Click here for a project overview.

Preliminary plans have been prepared by CH2M Hill, Inc., for the North Carolina State Ports Authority and delivered in 2008.

Pro Forma Business Plan

Planning Assumptions

Infrastructure Report

The preliminary plans describe an automated facility to load and unload containers from the latest generation of very large container ships. The “design vessel,” 1263 feet long, with a beam of 185 feet and draft of 50 feet, would not be able to pass through the Panama Canal, now or after completion of the third series of locks, planned for 2014. The enlarged canal would accommodate vessels of 160-foot beam, approximately 50% more than the current maximum.

In June 2010, PFRichardson/TEC, another consultant to the State Ports Authority, delivered an assessment of the CH2M Hill plans for the North Carolina International Terminal. This report provides some cost-saving suggestions, considerable detail on the design of the terminal itself, and a new cost estimate. With escalation, the complete project, with a capacity of three million twenty-foot equivalent units (TEU), would cost $4.4 billion.

PFRichardson/TEC provided a plan of building in stages.  The first stage, with a capacity of about one million TEU, would cost a mere $2.95 billion.

Review of Planning Concepts and Privatization Options

The Channel in the Cape Fear River

Although the site purchased by the North Carolina State Ports Authority is located on the Cape Fear River about four miles from the mouth, the river is not a deep water harbor and the existing channel has been created by a succession of dredging projects. That channel is too shallow and too narrow for the vessels for which the port is intended, and has turns that cannot be navigated by such vessels. At the terminal site the river is only about one to four feet deep, and water of sufficient depth for the design vessel is seventeen miles out to sea. The river and the offshore channel must be dredged over a distance of 22 miles.

Consultants to the State Ports Authority recommend a new, straighter channel to the east of Battery Island to bypass the sharp turn between Battery Island and Southport. Such a channel would be cut through an area never used for navigation that is above water at low tide. The Wilmington District of the Corps of Engineers, however, prepared estimates of the dredging cost for the megaport using the existing channel alignment. The Corps estimate of the cost of initial dredging is $1.2 billion. The State of North Carolina would bear 60% of that cost.

Click here for a map of the channel proposed by the consultants.

Click here for details on the dredging planning and construction process.

Economics

The entire project–the terminal and the related dredging and highway and rail improvements–has been estimated to cost over $4.4 billion. The business plan requires capture of container movements from other East Coast container terminals representing about fifteen times the current container movements at the Port of Wilmington, 20 miles upriver. The container terminal at Wilmington operates at well under its capacity, even with container handling charges much lower than those of other ports serving the region. Click here for more detail on the economic issues and several comprehensive reports.

Environment

Needless to say, the environmental impacts of such a massive project would be very substantial. And although the North Carolina State Ports Authority has spent over $10 million on studies, none of those studies have addressed environmental issues. Click here for more detail on the anticipated environmental consequences of the megaport project and some reports prepared by independent investigators.

Safety

The proposed port would be located next to the Brunswick Nuclear Plant, with two reactors and an above-ground spent-fuel storage facility, and immediately downriver from the Military Ocean Terminal at Sunny Point, the largest ammunition transhipment facility in the world. This immediately comes to mind as a tempting target for terrorist attack, but an even greater problem is the magnification of the risk from ordinary accidents in the handling of hazardous materials, shipboard fires, containers lost overboard while approaching the coast, heavy truck traffic on local roads, and other potential calamities too numerous to mention. Click here for more detail.

Opposition

The City of Southport, the five other municipalities in the vicinity of the proposed container terminal, several environmental organizations, and Congressman Mike McIntyre have made statements or adopted resolutions of opposition to the North Carolina International Terminal.

Click here for links to the full text of the statements and resolutions of opposition.

On July 27, 2011, following disclosure that the State Ports Authority was planning to build a plant at the State port at Morehead City to melt solid sulfur for onward shipping in the molten state, the Governor issued Executive Order No. 99, reciting that “it is important for state-owned and state-operated facilities to work with local governments and private neighbors to coordinate activities in such a manner that they may have an overall positive impact in the community of which they are a part.” Inasmuch as all six local governments in the Southport area have issued resolutions of opposition to the planned terminal on the basis of incompatibility with the local economy, which is based on the quality of life and the unique coastal environment, this Executive Order would by its terms prohibit further consideration of the planned container terminal. Nevertheless, the State Ports Authority and the NC Department of Transportation continue to regard the project as “viable.”

Is It Over?

On July 21, 2010, after the opposition from local governments and Congressman McIntyre appeared and the North Carolina General Assembly passed a budget bill with a prohibition on use of State funds for the North Carolina International Terminal, the State Ports Authority issued a statement that it “is placing the proposed NC International Terminal project on hold.” The State Ports Authority removed information on the terminal from its Web site and discontinued public promotion of the project.

On December 7, 2010, Dee Freeman, Secretary of the North Carolina Department of Environment and Natural Resources, sent a “letter of intent” to the Wilmington District of the US Army Corps of Engineers expressing the intention of the State to share the cost of a feasibility study for certain projects in the Cape Fear River to facilitate container ship traffic to the Port of Wilmington. The letter included this clause: “While the State of North Carolina does not desire to serve as the non-federal sponsor of the NCIT project, … . ” (‘NCIT” is North Carolina International Terminal.)

The Wilmington District of the Corps of Engineers treats this letter as a step towards redirecting the funds originally allocated to the reconnaissance study for the dredging for the North Carolina International Terminal. The “section 905(b) analysis” part of the reconnaissance study has been revised and concludes that there is a “Federal interest” in the projects named in Secretary Freeman’s letter. With the letter in hand, the planning process can move forward on those projects instead of focusing on the North Carolina International Terminal.

This was initially regarded as the end of the North Carolina International Terminal. However, two of the three components of the refocused study would be applicable to the North Carolina International Terminal. And the section 905(b) analysis which defines the scope of the feasibility study includes that terminal and associated dredging as an alternative.

The North Carolina State Ports Authority retains the property purchased for the container terminal (and the associated debt) and has not adopted a resolution abandoning the project. On December 15, 2010, the State Port Pilot reported

“Ports officials officially listed NCIT “on hold” in the wake of the General Assembly’s decision, though board of directors chairman Carl Stewart has maintained advocacy of the project. Spokesperson Shannon Moody said the authority considers Freeman’s letter an announcement supporting the Port of Wilmington, not one opposing NCIT.”

In June 2011, the North Carolina House of Representatives passed a budget bill continuing the prohibition on the use of State funds for the North Carolina International Terminal. When the bill went to the Senate, that prohibition was removed, surreptitiously and without marking the change, and the final legislation did not include the prohibition.  State Senator Bill Rabon later admitted responsibility for the removal of the critical language.

In September 2011, management of the State Ports Authority presented to its Board of Directors a comprehensive review of forward plans which included the North Carolina International Terminal. See slide 59 in that review.

In the 2012 session of the General Assembly, the State House of Representatives again included a prohibition against the use of State funds for the North Carolina International Terminal in its budget bill.   Again, it was surreptitiously removed in the Senate.  However, the Conference Committee restored it.

In 2013, breaking tradition, the Senate initiated the budget legislation, did not include the prohibitive language, and the final bill does not have it.

Also in 2013, the State Auditor, in auditing the financial statement of the State Ports Authority for the fiscal year ending June 30, 2013, required the State Ports Authority to write off approximately $4.3 million in engineering costs for the North Carolina International Terminal that had been treated as construction in progress on the asset side of the balance sheet.  But another $6 million in such costs was retained as an asset.  Note 5 of the financial statement, on page 27, explains:

 Authority management still considers this project viable at June 30, 2013, and there are no plans for permanent construction stoppage. Many factors will contribute to the timeline of the project moving forward including funding and the opening of the Panama Canal and the related effects on current infrastructure.

In early 2015, new management of the State Ports Authority prepared a new 2015 Strategic Plan. and Appendices.. That plan contemplates substantial growth in container traffic and concomitant capital improvements. The plan (page 4) speaks of examination of “a new strategic North Carolina seaport,” and includes the Brunswick County site for consideration.

Also in 2015, SB160 in the Senate includes language that provides for removing a rock wall on the east side of the Cape Fear River placed there by the Corps of Engineers in the 19th Century to prevent inlets from the sea opening in storms. Removal would open the way for a new channel directly to the sea from the Brunswick county site purchased by the State Ports Authority in 2006 for the North Carolina International Terminal.  That language is included as section 14.6(h) of H97, the Senate version of the budget bill for fiscal year 2016, now under consideration in the General Assembly.

Route of Possible New Channel

Yogi’s caution comes to mind: “It ain’t over ’til it’s over.”

 

The Maritime Strategy Study

In early 2011, the North Carolina Department of Transportation initiated a comprehensive, $2 million deepwater port study to investigate the feasibility of providing access to North Carolina ports by deep-draft vessels, to establish the State as a “portal to the global economy.”  Among the options was the dormant container terminal project at Southport. Click here for the NCDOT maritime library page, which includes the final report and volumes of reports on individual tasks.

The NCDOT chose nationally-recognized engineering firms, AECOM and URS to conduct the study, assisted by Eydo for public outreach.  Alas, although those firms are competent and experienced engineers, such competence did not seem to include port planning.  The final result was without compeer in awfulness: bulky, poorly organized, and misleading.  Sometimes in error, sometimes deliberately.   Fortunately, the study report is so cumbersome that it has been disregarded and the study Web site closed down. The State Ports Authority has in hand more recent and competent work by Moffatt & Nichol to assist in strategic planning.