By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hutchison Whampoa’s Freeport Harbour expansion plans have made the proposed location for an oil recovery plant “unsafe and unsuitable”, although its developer is progressing on recovering 200,000 waste oil barrels at South Riding Point.

A leading Grand Bahama Group investor, in its interim results announcement, disclosed that it had been working with Freeport Harbour Company and Grand Bahama Port Authority (GBPA) to successfully identify a new site.

The switch, TXO Plc chairman Tim Baldwin said, had been enforced by the Billy Cay project, which is intended to expand Freeport’s Harbour.

Few details on the so-called Billy Cay project have been released, although several sources said it was separate from the proposed $250 million, Phase V expansion at the Freeport Container Port. Several said they believed it may involve Bahama Rock excavating, and removing, the rock at Billy Cay, which lies in the middle of the harbour.

Mr Baldwin, in his update to TXO investors, said uncertainty over the hydrocarbon recovery plant’s permanent location had not impacted Grand Bahama group’s operations and performance to-date.

This is because the company, which trades through its subsidiary, Morgan Oil Marine, has been focused on a temporary recovery plant at South Riding Point, one of Grand Bahama’s two marine oil storage terminals, for the past six months..

This facility, owned by Norwegian-based Statoil, has 200,000 barrels of waste oil contained in open ‘storage ponds’, and Morgan Oil has been cleaning up and processing these for re-sale.

Some 32,000 barrels had undergone this process by TXO’s half-year, and Mr Baldwin expressed hope that all South Riding Point’s waste oils would have been sold by the end of this month.

Grand Bahama Group/Morgan Oil Marine executives either did not return Tribune Business calls, or could not be contacted, before press deadline last night.

Still, in his message to shareholders, Mr Baldwin said Morgan Oil Marine had worked with another company in which TXO Plc has an interest, Oil Recovery Services (ORS), to build a temporary oil recovery plant at South Riding Point.

This will “process around 200,000 barrels of waste oils that have been collected at one of the two large transhipment oil storage facilities on the island”, Mr Baldwin wrote.

“An initial 32,000 barrels have been collected, processed and sold since commencement in May, and Morgan Oil Marine hopes to complete the processing and sale of all the remaining barrels by the end of July 2014,” Mr Baldwin added.

“This is important as it resolves a hitherto unresolved, long-standing environmental issue of oil being stored in large open ‘storage ponds’ that are visible by satellite.

“This process has attracted a lot of interest from around the world, and negotiations are ongoing concerning a number of other potential sites - both in and outside the Commonwealth of the Bahamas - that, depending upon circumstances, will be pursued by ORS independently or, where circumstances lend themselves to a marine-based facility, as a joint-venture between ORS and Morgan Oil Marine.”

Mr Baldwin said once the work at South Riding Point was completed, the plant would be dismantled and reassembled at a new Freeport Harbour site.

He explained: “After much deliberation, it has been decided that the proposed development of the Billy Cay project in Freeport Harbour will effectively render the existing proposed site for the Morgan Oil Marine hydrocarbon recovery plant unsafe and therefore unsuitable.

“As there are no free sites available, the Freeport Harbour Company and Grand Bahama Port Authority have been extremely co-operative in re-arranging their existing and proposed operations so that Morgan Oil Marine has a new and substantial intermediate site available, which is well-suited to its short and medium-term needs, ahead of the construction of a new, purpose-built site in line with the Harbour expansion that will fulfil all of Morgan Oil Marine’s requirements for the long-term.”

Mr Baldwin said Morgan Oil Marine had also installed a waste oil processing and recovery plant on Barge Martha, featuring 10 separate tanks and a self-contained holding capacity of 35,000 barrels.

“Its processing capacity as currently configured is restricted to a maximum of 2,500 barrels per day,” Mr Baldwin said.

“However, this has enabled Morgan Oil Marine to continue processing the used oils it has been collecting locally and from the high volume of ships that visit Freeport Container Port, including those of one of the largest fleets in the world.

“Barge Martha has processed material offshore whilst issues involving the land for its existing onshore facility in Freeport Harbour have been resolved.”

TXO PlC has increased its equity stake in Grand Bahama Group to 35.67 per cent.

Looking ahead, Mr Baldwin added: “Grand Bahama Group’s marine oil waste business in Freeport started trading regularly from the beginning of this year.

“This business will be scaled up over the next year through the onshore development plans. Plans are slightly delayed on this because of the oil remediation contract, which has temporarily diverted resources. The success of this contract will assist the financing of the expansion at Freeport.”