Bulk Fuel

BULK FUEL
WHITE PAPER

By Whitey Willauer

This white paper presents the essential details to the BOS in order that their decision may be made in a timely and informed manner.

The BOS was briefed on Wednesday, September 17. 2008 as to the status of the Bulk Fuel Project (see Action Item Section 9). The Bulk Fuel White Paper was presented to the BOS as background information.

1. TOWN LICENSE
· Town license for fuel tanks at 8 New Whale Street expires on September 5, 2009 for 975,000 gallons. There are 11 tanks ranging in size from 10K (1), 50K (1), 56K (5), 78K (1), 170K(1), and 211K(2) gallons, and ranging in age from 1947 (1), 1948 (1), 1949 (4), 1953 (1), 1958 (1), 1959 (1), and 1963 (2).
· License requires that Winthrop to provide an equivalent facility. License requires public hearings so termination is not pro forma.
· The Winthrop lease with Harbor Fuel expires in 2018. In 2018, Harbor Fuel is free to change locations. Winthrop has very favorable storage and flow rates. If Harbor Fuel built their own storage facility it would probably include a minimum of 10 days of gasoline and 10 days of fuel oil.
· There are 20K to 25K gallons of reserve fuel for the Electric Company. The electric company would use about 5K gallons per day to supply the entire Island. 6 standby turbines are down to 4 as a consequence of the second cable to the mainland. The fuel is stored on the airport property.
· Grocery store/parking lot lease with Winthrop expires in 2010.
· Fuel license with Harbor Fuel expires September 5, 2009
· Harbor Fuel is the sole user of the fuel tanks at 8 Whale Street. Sun Island and other distributors bring fuel in by tanker trucks.

2. USE OF TOWN LAND
· Bulk fuel facility will require 5 acres according to Ascent Study. This study was assuming a much larger facility than the present thinking.
· The airport leases land for $0.90 per square foot per year. An acre at this price would yield 43,560 x $0.90 = $39,285 or $40K per acre per year.
· Need access for entry and exit

3. USE OF DOWN TOWN LAND
· Assuming that it is in the best interests of the Town to move Bulk Fuel facility from the present location, the Planning Department needs to develop an overall plan that best serves the needs of the Community and the Stake Holders.

· The most logical approach is to include the Bulk Fuel property, Grand Union Store and Parking, Greenhound Property, National Grid property, and the concerns of Nantucket Island Resorts into the overall plan.

· The state has some valuable tools to assist cities and towns with economic development and permitting as part of the Chapter 43D program. The 2008 ATM Article 90 authorized the Planning Director to prepare a Chapter 43D application for the area surrounding the down town Fuel Tanks.
§ Greenhound Property (10-12 Washington)
§ National Grid Property (10 New Whale, 1 & 5 Salem)
§ Nantucket Island Resorts Parking Lot (15 Candle)
§ Winthrop/Grand Union (7 & 9 Salem, 4 New Whale)
§ Winthrop/Parking Lot (2 New Whale, Straight Wharf)
§ Winthrop/Bulk Fuel (9 Salem, 8 New Whale)

· Article 90 does not include:
§ Dreamland Theater (17 S Water, 18 Easy)
§ National Grid transformer Building (2 Commercial)
§ National Grid (12 New Whale)

· The Massachusetts Association of Regional Planning Agencies (MARPA’s) has developed a Best Practices Model for Streamlined Permitting. The Best Practices model makes permitting more predictable, equitable, cost effective, and efficient while reinforcing local jurisdiction, encouraging community-supported projects, preserving local resources, and maintaining the standard of review. The maximum grant award for a Chapter 43D Program was lowered from $100,000 to $60,000 on September 17, 2008.

· The ATM 2007 Article 10 authorized the expenditure of $250,000 in costs associated with further study of proposed bulk fuel facility. Such expenditure is to be made by the Town Administrator with the approval of the BOS. At present there is $240,336 still in the account.

· The question has been posed whether the Article 10 funds can be used for studying the plan for relocation of the Bulk Fuel facility.

· The Town is embarking on a Downtown Revitalization Study which should provide valuable input into Bulk Fuel Tanks relocation plan.

4. GOVERNANACE
· Three scenarios:
A. TON buys fuel and owns facility
B. TON owns facility and receives flowage and storage fees
C. Sole source supplier (monopoly). Harbor Fuel is the sole user and is willing to own and operate the new bulk fuel facility.
· Most likely governance would be an enterprise fund. However, the facility must be competitive, and be able fund support staff.
· Most likely the 15 South Pasture land should be a single enterprise fund. The rental would yield 15acres x $40K = $600K to the town less operating expenses.

5. TRANSPORTATION AND STORAGE
· 10 million gallons of consumption per year would require 1,000 tank trucks per year or about 3 trucks per day year around.
· There are 7 types of fuel delivered to Nantucket: heating oil, 2 types of diesel; 2 grades of gasoline; ethanol; and kerosene.
· A proposed new freight boat would be able to accommodate 12 semis. It would be designed for roll-on roll-off. It would be slower 14 to 15 knots to save fuel. The round trip cost for a fuel truck is $1,050 or $0.10 per gallon. Regular semis are charged $525 and the return trip is not charged. This is a boon for solid waste transportation.
· If the fuel is brought in by tanker trucks, there is more wear on the cobbles on Main Street. At present the fuel is brought in by barge and then shipped by trucks around town. These trucks are smaller but there are more trips and more chance for spillage.
· The Steamship Authority could best accommodate the additional tanker trucks on weekends, afternoons, and in winter. The delivery schedule, consumption requirements, and emergency situations drive the storage size. The Steamship Authority is considering building a larger freight boat
· Delivery from an alternate port needs to be studied such as New Bedford.
· In 1988 the fire chief was opposed to additional trucks coming through town. This risk would be offset by the risks of leaving the tank far where it is. TSA disaster study needs to be reviewed.
· At a recent meeting (5/12/08) with the Fire Chief the following points were made: not to renew differs from revoke; bottom loading is not required by DEP; multiple tanker trucks may need an escort to expedite travel; corners increase risk; new traffic plan may be called for; age of tanks is concern; license expires September 5, 2009;

· Storage Options:
1. The barge that lands in Town holds up to 800K gallons of fuel. The average delivery is between 400K and 600K gallons of fuel. Barge delivery was the only delivery method prior to building freight boats. Barge delivery does not permit premixing the ethanol.
2. Single point delivery off shore would require 5M gallons of storage with three deliveries per year
3. Tanker truck delivery would require a much small facility. Tanker truck delivery allows pre-mixing of ethanol.

6. FINANCES
· Preliminary financing of $250,000 is available. This can be used to develop a top level design at the South Pasture location. This money can be spent at any future time as it was authorized by 2007 ATM.
· Federal pre-disaster mitigation study funds may be available for relocation of Fuel Tanks
· Top level design and feasibility analysis for bulk fuel facility.
1. Account for Harbor Fuel, Sun Island, Marina, other retailers, Nat’l Grid, and Hospital
2. Five acres is needed for large facility much less for smaller facility
3. 2 to 3 weeks capacity if the minimum facility requirements
· An important consideration is that the bulk fuel facility be competitive

7. TIME LINE
· License renewal is critical.
1. The Town’s Fuel license with Harbor Fuel expires September 5, 2009
2. Grocery store/parking lot lease with Winthrop expires in 2010
3. The Winthrop lease with Harbor Fuel expires in 2018
· Briefing BOS

8. OTHER ISSUES
· Wannacomet well head issue does not seem to be a problem
· Moving Bulk Fuel Facility would require new diesel and gasoline tanks at Marina. These would be 8K to 10K gallon tanks. These would require extra space on the marina property.
· No passengers are permitted on hazardous boat
· The existing fuel tanks are located very close to the electric company main distribution center. A major fire or explosion would knock out the Towns electric power from the two cables.
· Cost of fuel on Nantucket
· Legal opinions
· Coordination with Downtown Revitalization Committee
· Coordination with ReMain Nantucket
· Coordination with Harbor Fuel and other retailers
· Coordination with Winthrop
· Coordination with possible developers.
· Avoidance of lengthy litigation

9. ACTION ITEMS

Accomplished Actions
The BOS on September 17, 2008 unanimously approved the following:

The policy of the BOS is to support the relocation of the fuel tank farm from its present waterfront location to a site outside of the downtown area because of environmental and safety concerns.

Future actions
1. Town Counsel recommended (9/17/08) informing the licensee Harbor Fuel that the BOS has given the go ahead on relocation of the fuel storage tanks.

2. Make presentation to NP&EDC at special meeting as soon as possible.

3. Include the Bulk Fuel property, Grand Union Store and Parking, Greenhound Property, National Grid property, and the concerns of Nantucket Island Resorts into an overall Bulk Fuel relocation plan.
4. Consider dedication of up to 5 acres of the Industrial Property to Bulk Fuel facilit