Port board wary of pellets company reopening

Published 9:00 am Wednesday, March 28, 2018

By Ken Stickney


A German-based wood pellets company, out of operation at the Port of Port Arthur since July, has signaled its intention to rebuild and reboot this year.

Subscribe to our free email newsletter

Get the latest news sent to your inbox

Not so fast, says the port’s Board of Commissioners.

German Pellets holds a problematic safety records, critics say, including two workplace deaths — one in Port Arthur, one in Louisiana — a substantial federal fine for safety violations and continues to parry lawsuits filed against it in Texas.

The company also incurred fire-related problems in 2017, including a “heat event” inside one of the five silos the company used at their leased port location. That heat event lingered for some two months, generating complaints from other port tenants and western Port Arthur neighborhoods about “smoke, airborne particles and respiratory issues.” A group of neighbors filed a private lawsuit.

“We would like nothing better than for them to resume their operations,” port spokesman and Port Director Larry Kelley said of the German company. Before they do, Kelley said, the commissioners say consultants they have hired, U.S. Forensics, must approve of German Pellets’ rebuilding plans and of how those plans are carried out.

German Pellets, founded in Germany in 2005, was welcomed at the port when it opened five years ago and made its first shipment Sept. 30, 2013. Essentially, the company uses timber from locally owned resources and creates a clean energy substitute for coal. Much of its business was done with the United Kingdom.

German Pellets opened a manufacturing plant in Woodville, an hour north of Port Arthur, and built a second plant in rural Urania, Louisiana — it has since been sold — in 2015.

German Pellets employed more than 100 people in Woodville, and 20-30 at the port, Kelley said.

“In terms of tonnage, it shipped 350,000 to 500,000 tons a year, about half of the port’s tonnage at one time” at the port, Kelley said.

“In terms of size, it fit in with other customers here,” he added.

But the company encountered problems, filing for bankruptcy in 2016, a case that is still pending. In early 2017, the port said, a fire destroyed the ship-loading conveyor at the port. In mid-April, the heat event occurred, which eventually led to the collapse of one silo in June. The city of Port Arthur filed an injunction against the company last summer.

Now, the port says, a reorganized German Pellets, led by bond holders, has secured financing to rebuild the fifth silo and return to operations, perhaps by late summer or early fall.

“We recognize German Pellets wants to resume business operations,” the port said in a prepared position paper this week. “As landlord, we want to see them do so in a safe manner providing jobs and revenue to the port and community.”

But the commissioners say that won’t happen until “the hired consultants provide engineering, environmental and safety reviews for the project, and give recommendations for addressing problem areas or concerns that might be identified.” Absent consultant approval, the board said, it won’t permit German Pellets to resume operations at the port.

In imposing restrictions, Kelley said, the elected five-member board has “the pulse of the community.” He said “lots of constituents were concerned.”

“We will require them to demonstrate that recovery plans meet or exceed all applicable legal, safety and environmental requirements, as well as operational requirements associated with being a tenant of the Port,” the port said in its statement.