Welland Tribune, Canada: Shell leaving

Unclear where fuel to service ships plying the Welland Canal will come from in future, says Port CAO

By MARK TAYTI
Local News – Tuesday, July 10, 2007
Tribune Staff

PORT COLBORNE

Shell Canada is pulling out of Port Colborne, leaving some big questions about the future of the city’s only marine fuel dock.

“We’re concerned about the fuel dock continuing to operate in Port Colborne,” chief administrative officer Robert Cotterill said Tuesday.

He said Shell has told the city that its fuel operation in Port Colborne will cease at the end of July.

Cotterill said the future is unclear about where fuel to service the ships plying the Welland Canal will come from if Nyon Marine Fueling loses Shell as a supplier.

He said Shell has expressed plans to remove its fuel tanks as it winds up business in Port Colborne.

“This is between Nyon and Shell,” Cotterill said. “It’s hard to speculate. If the tanks come down, they have to go back up. The concern is the time that it will take for that to happen.”

Cotterill said the city was surprised to hear the tanks were going to come down.

Shell Canada operated under an agreement with St. Lawrence Seaway Terminal Corporation until 2005.

Then things changed.

A report to council in December 2005 recommended the city enter into an agreement with Canada Lands to purchase eight properties that it was currently leasing, one of which was the fuel dock operated by Shell Canada.

Cotterill said Port Colborne was first in line to purchase the properties from Canada Lands Corporation when they came up for sale because of the city’s government status.

Early in 2006, a report came to council that identified the terms of agreement to sell the acquired property associated with the fuel dock.
A provision was embedded in the agreement for Port Colborne to receive “$10 per ton of fuel sold or supplied from the property.” The city also reserved the right of first refusal if the new owner of the property decided to sell it.

Mayor Vance Badawey said the deal closed prior to the last municipal election.

He also said he could not comment on the current situation because of a direct conflict of interest.

The Badawey family operates a food supply business for ships plying the Great Lakes. He has been advised by the city solicitor not to comment on the dealings between Shell and Nyon Marine Fueling, which is the new owner.

Cotterill said the original decision to sell the property was seen as a way to generate new sources of revenue for the city.

“It was done to put the city in a better financial position,” he said.

John Peck, Shell Canada public affairs manager, confirmed Tuesday Shell Canada has made the decision to leave Port Colborne at the end of July – but removing the existing tanks and other infrastructure owned by Shell could take considerably longer.

“We have decided to close up business in Port at the end of July,” Peck said. “We regret having to make the decision and we thank the people of Port Colborne for allowing us to do business for more than 40 years.”

He said the tanks and other infrastructure on the site that belong to Shell will be dismantled.

“We prefer not to sell them because of future liability concerns and the tanks might hinder future environmental impact assessments and any remedial efforts required.”

Peck cited two reasons for Shell Canada leaving Port Colborne.

“One reason was the failure to reach a new arrangement with the new owner,” Peck said.

“Economics of the site” is the other reason.

Peck said Shell has met with Badawey to let him know about their plans.

“We still remain open to discussion but at this point our plan is to vacate the property,” he said.

Shell is considering keeping the “lubricating oil” portion of the business in Port Colborne if it can find a suitable new location from which to operate.

Otherwise, the company is looking at an exit strategy to coincide with the end of its existing lease with Nyon Marine Fueling on Nov. 14, 2007.

“There are a number of steps that must be taken before we can vacate the property. We have to start now to meet the exit date.”

He confirmed that all of the existing Shell tanks would be dismantled before the end of the year.

There are currently two tanks remaining. One contains marine bulk oil and the other contains diesel fuel. Shell will also be removing associated piping and loading equipment, Peck added.

A third “unused tank” owned by Shell was taken down earlier this year.

The next closest Shell marine fuel dock is located in Sarnia.

Gordon Baker, president of Nyon Marine Fueling, questioned Shell’s decision to stop supplying fuel in Port Colborne in the middle of the shipping season.

“Nyon has yet to be advised by Shell, but we understand the mayor, the shipping association and the Seaway have all been informed,” Baker said. “Shell has told them they can be fueled at their dock in Sarnia. It’s a little bit of a surprise to Nyon.”

Baker said Nyon met with Shell on several occasions, but “we could not come to terms on renewing the lease.”

He said Nyon was prepared to extend the Shell lease to the end of the 2007 shipping season to prevent any disruption in service. Nyon had also offered to purchase the Shell equipment.

“Shell has insisted that it wants to demolish its equipment in Port Colborne. We were planning in the off-season to replace the tanks. Our game plan is to not have an interruption in service. We are working on a strategy to continue to supply ships in Port Colborne with fuel and we have quotes on what it will cost to replace the tanks.”

Baker said Nyon Marine Fueling is committed to Port Colborne in the long term and the decision by Shell to leave is an “inconvenience” that will affect local jobs.

“I’m glad you called,” Baker told the Tribune. “I don’t want people to think that we terminated a lease in the middle of the shipping season.”

He said the company is already talking with other suppliers.

“There is considerable interest in supplying Port Colborne,” he added.

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