Westway Terminals last year rebranded with a new name, new logo and new growth strategy. It is now called Contanda. As a leader in bulk liquid storage solutions for more than 60 years, Contanda continues to evolve and focus on what CEO Jerry Cardillo calls a transformation and growth journey that he expects will more than double its size in five years. Liz Gyekye catches up with him to find out how the company has evolved.
How are you finding the biofuels market at the moment and how is that impacting on Contanda?
The biofuels market is very, very active. For Contanda, biofuels is very active on the West Coast and Gulf Coast, primarily. It’s a combination of the opportunities being created from valuations around renewable identification numbers (RINS) under the renewable fuel standard programme and the low carbon fuel standard (LCFS) that is boosting the biofuels industry. We are also seeing a lot of interest in our storage and transloading capacity. We’ve almost doubled how much biodiesel we are storing year over year. So, we have almost doubled the amount of tanks that we have put in biodiesel storage and this is still growing.
How do you see the future panning out?
The interest in renewable products continues to be strong and there is still a lot of support for that in the US, particularly in the West Coast. If you are manufacturing diesel you have to have enough RINs to cover a percentage of your products.As long as the regulations stay in place, I think we are going to see growth in this area.
How much capacity are you seeing in the biofuels market?
Nationwide, Contanda has around 7m barrels of storage. Of course, we always have tanks undergoing maintenance. So, you can never really say we have 7m barrels active. Right now we have just under 500,000 barrels in biodiesel and this is growing. We have around 115,000 barrels of storage capacity that is under construction right now. I can see a good percentage of that going into the biodiesel market. We are also looking at projects in Stockton, California, the state of Washington, and Houston, Texas for more expansion. A lot of it is being driven by the RINs, the LCFS and biofuels market.
Talk to me a bit about Contanda’s rebrand?
We are in a growth phase. There is a bit of history to this. ED&F Man was established in 1783 and is a molasses trading company. In the 1990s, they acquired Westway Terminals and Westway Feed. They started building terminals around the country to receive their molasses and then blended the commodity and sold it to various customers. In 2009, the feed and the terminal division went public. In 2013, a private equity firm from Stockholm, Sweden, EQT bought Westway Terminals. However, it did not buy Westway Feed. Westway Feed went back to the ED&F Man portfolio. As Westway Terminals progressed from 2014 to 2015, people automatically thought of molasses storage. This is because it still had such a long history, plus the same name and a very similar logo to Westway Feed. So, in 2016, we started on a new journey to transform ourselves into business more focused on petrochemical and hydrocarbons. We moved the headquarters from New Orleans to Houston. The plan to move our headquarters was partly to separate us from this process. We also wanted to get closer to our customer base and our largest asset portfolio is in Houston. Elsewhere, we changed our name as part of that growth strategy to rebrand ourselves as a petrochemical, hydrocarbon and agricultural storage company. So, we are currently on a significant growth phase in Houston, Baltimore, Stockton, California, and Grays Harbor, Washington.
How did the name Contanda come about?
We wanted a company with less than three syllables and when you Googled it, it had to be unique with no results. Of course, it means something now when you Google it now, but it did not when we announced it. It’s got a little flair to it. It’s got an international flair to it. It’s exciting times here. Contanda’s growth strategy is to double its capacity in five years. So, we have 7m barrels of storage. In 2022, we would like to have 14m barrels of storage in a variety of growth projects around the country. It’s exciting stuff.
What are your biggest opportunities?
I think the biggest opportunities for biofuels storage for Contanda will continue to be in three areas – the Northwest of the US, West Coast of the US and Gulf of Mexico in the US. We are focused on those three growth areas as we speak. We are working on three projects (some bigger than others). They are all tied to either renewable diesel, biodiesel, ethanol and methanol storage. In our markets we are seeing growth and this growth is partly related to the RINs and LCFS. We haven’t seen any negative impact from anti-dumping duties.
Where do you expect demand to come from?
The aviation industry is very much experimenting and is consuming small portions of renewable fuels. It’s cleaner burning and very efficient, but it is more expensive in some cases. It depends on the credits that you get on the back of it. On the diesel side there is a lot of confidence in this product. We primarily store biodiesel, but ethanol is a big part of our growth plans. We have 16 terminals in 12 different states. We also have one in Hamilton, Canada. The trend for us has been strong interest in renewables in all platforms year over year.
What will represent the biggest challenge to biofuels?
We are in a space that is being driven by mandates or regulation by certain states or the government. They do not last forever. We are keeping a keen eye on renewable diesel in the West Coast and what’s going on in Canada and Mexico as well.
Is the low oil price impacting at all?
The low oil price is helping gasoline and diesel consumption stabilise because demand begins to stabilise on the gasoline side of the equation. Cars are getting more efficient. Anything else? In November 2016, we bought a steel company. We were on a journey to expand our commodity base. The business is doing very well. It’s based in the Houston ship channel. It was a good investment and good business that we purchased. We are excited to have it and for it to be part of our portfolio. Instead of terminaling just liquids, we are terminaling steel. If you believe that the current administration is about to focus on infrastructure growth, it is an interesting business to own and doing very well.
Biofuels International – March/April 2017