Two of the state's top economic development officials asked the N.C. Railroad Co. Thursday for $7 million a year for at least 10 years to help finance new facilities at the Port of Morehead City to store and handle wood products for shipment to Europe.
If enough variables align, the project could help North Carolina become a top supplier of wood pellets used in energy production abroad, state officials said. It would also create jobs for loggers, truck drivers and others in the timber business in eastern North Carolina.
State officials are trying to sell the idea as a way to use existing state resources – trees – to create jobs in economically depressed eastern North Carolina and boost business at the state ports at the same time.
State Commerce Secretary Keith Crisco and Ports Authority Executive Director Tom Bradshaw made presentations to the Railroad Co. board of directors at its meeting Thursday afternoon in Raleigh.
They need the cash – which the Ports Authority does not have – to help finance a $60 million facility at the Port of Morehead City to store and handle the wood products to be loaded on ships. Bradshaw said the ports authority also hopes to build a similar facility at the Port of Wilmington.
The Railroad Co. could benefit because the new business would generate more rail traffic moving the wood products from the forests throughout eastern North Carolina to ports, Bradshaw said.
"I'm asking them to make a commitment for us to grow this business, which benefits all of eastern North Carolina," Bradshaw said after the meeting.
John Atkins III, chairman of the N.C. Railroad Board, said the board would consider the request at a special meeting in October, but Bradshaw pressed him to meet sooner.
"I can't promise you that," Atkins responded. "We'll move it as quickly as we can."
The ports authority's request for cash was first made in a Sept. 4 letter from Bradshaw to Atkins.
"The intent of this request is to work toward ensuring that the Railroad Company remains an active and contributing participant in the state's on-going logistics efforts," Bradshaw wrote in the letter.
Wood to energy
Put simply, here's how the wood pellet business would work:
Private companies would set up facilities in eastern North Carolina where they would harvest trees and manufacture "wood pellets." From there, they would be transported by truck and rail to the state ports, which would store the product and load it on ships for transport across the Atlantic to Europe. There, they would be used as fuel for power plants and other energy sources.
Crisco told the board members that he believed the effort could create more than 200 jobs directly in the timber business and hundreds of indirect jobs.
"I believe these numbers are very conservative," he said.
Crisco estimated that wood shipments would generate an additional 450 trains per year – 900 including the return trip – to the Port of Morehead City. He acknowledged that could upset the "tranquility of Morehead City."
He also said there is competition from other states – including South Carolina and Alabama – hoping to tap into the same market in Europe.
According to Ports Authority documents, the East Coast is geographically well-positioned to supply Europe with wood pellets, and there are sufficient forest resources in regions surrounding N.C. ports.
John Pike, a Railroad Co. board member from Goldsboro, asked if North Carolina has enough available forest to supply what is needed in Europe and not deplete the resource.
Robert Hosford, an international trade specialist from the N.C. Department of Agriculture and Consumer Services, said that there are about 14 million metric tons of renewable wood resources in North Carolina and that about 8 million to 9 million metric tons are used annually. He said North Carolina forests can meet the demand.
"They're going to get it from somewhere," he said. "We have the softwoods, especially in the east."
George Rountree III, a Wilmington lawyer and member of both the ports authority and Railroad Co. boards, started Thursday's meeting by telling fellow railroad board members that he led the charge at the ports authority to ask for the money.
"Eastern North Carolina has long been the stepchild of a growing state," Rountree said, adding that many people who grow up there leave because of the lack of job opportunities.
Rountree said state House Speaker Thom Tillis, R-Mecklenburg, appointed him to the boards because he believes that the ports authority and N.C. Railroad aren't as active as they could be in "promoting business, commerce, industry and jobs."
"I want you to know that I share that view at this juncture," he said.
Rountree said in an interview Wednesday that the ports authority needs the cash.
"The Railroad Company, in my opinion, can afford it," Rountree said.
The N.C. Railroad Co. owns and manages the 317-mile rail corridor from the Port of Morehead City to Charlotte, which carries up to 60 freight trains and 10 passenger trains a day. It is overseen by a board appointed by the governor and Legislature.
Danny McComas, the former state representative from New Hanover County who now is chairman of the ports authority board, said he believes the ports, the N.C. Railroad and the Global TransPark in Kinston must all work together to promote economic development.
Rountree and McComas both said it makes sense for the N.C. Railroad to chip in.
"It's time for N.C. agencies whose jobs are to promote business, commerce and industry to work together," Rountree said.