Port to issue record revenue bonds

The Port of Beaumont will issue $500 million in revenue bonds, the largest it’s ever issued for a public-private capital project, after a unanimous vote from its Board of Commissioners on Wednesday.

When issued, the bonds will help pay for a large capital project aimed at expanding and improving infrastructure for the port’s energy transportation partner, Jefferson Energy, as it continues to receive more oil and gas resources at the port.

“This kind of bond issue is a little bit newer to water ports our size, but I think it’s becoming more common,” Port Director Chris Fisher said. “As we create more public-private partnerships like the one with Jefferson Energy, issues like this will become more important for industrial growth.”

Revenue bonds are a specific kind of municipal bond designed to repay investors through future revenues, not through public funds. Fisher said the debt service would be held by Jefferson Energy and its associated companies instead of the port.

The port received an upgrade to an AA rating by Moody’s Investors Service last month, but the improved rating wouldn’t impact the revenue bonds since they won’t actually be backed by the port or its assets.

The board approved a public hearing for Sept. 19 at 10:30 a.m. for public comments about the bond issue as required by law.

Representatives from Jefferson Energy said there weren’t any details to share about the project at this point, but commented on its partnership with the port.

“Jefferson is proud of the growth it has experienced over the last several years and we remain committed to supporting our industry’s growth going forward,” a representative from the company wrote in an email.

While the focus of the project isn’t publicly clear, the port was originally presented with a resolution of only $350 million in revenue bonds that was later changed to the current amount.

Most of Jefferson Energy’s activity is based at the Orange County Terminal, which works as a public-private partnership, giving the company ownership of the facility and its existing infrastructure during its 50-year lease. If the company decides to leave after its lease, the terminal and any improvements performed by the company are returned to the Port of Beaumont.

The port made its second-largest revenue bond issuance in 2016, when it secured $244 million for Jefferson Energy’s expansion of its oil terminal.

The port, which partnered with Jefferson Energy in 2012, now sees around 40 trains a day carrying numerous tanks of ethanol, gasoline or even heavy crude from Canada.

According to a 2018 report from the U.S. Energy Information Administration, Canadian crude oil production has continued to outpace pipeline capacity, driving demand for more oil by rail. In January, crude oil by train from Canada to the Gulf Coast was already up 34% from the previous year.

The port claimed an increased tonnage of liquid products, including oil and refined products, of more than 300% last year.

The traffic increased enough to motivate the port to build a new $12.5 million overpass completed earlier in the year, helping to reduce the nearly 1,500 lost work hours per year from trains streaming into the terminal.

Another overpass for the port’s southern property is proposed in the next capital budget.

On the public side of the organization, the port is in the middle of a nearly $100 million expansion project that should see a new terminal created near Main Street by 2021. Fisher said there are plans for a $134 million wave of capital projects in the coming fiscal year.

There is also an expected $7 million in Tropical Storm Harvey-related projects mostly funded by grants from the Federal Emergency Management Agency.