NATCHEZ — The Natchez port represents, in the words of Natchez Inc. Executive Director Chandler Russ, a “safe harbor” for the Natchez railroad with the Monday announcement that Genesis Energy will move 20,000 rail cars carrying energy industry products through the port annually.

The announcement also anticipates the creation of 20 new, high-paying jobs in Adams County.

Genesis announced a partnership with Southern Pacific Resource Corporation to transport dilbit — which is essentially a crude oil made by blending together bitumen and diluent — to the Gulf Coast refining market.

The dilbit will be produced in Canada, and will come into the Natchez port by rail. It will be offloaded at Genesis Energy’s terminal, and Genesis will transfer the product to trucks or barges, which will then transport it to the coastal refineries.

Southern Pacific will then reload the rail cars with a diluent product brought into the port from the Gulf Coast, and will transport the diluent to Canada.

“We are excited about the opportunity to utilize and improve our existing assets in Mississippi to help facilitate the safe and efficient transportation of North American crude oil,” Genesis Energy CEO Steve Nathanson said. “We would like to thank the Mississippi Development Authority, the Port of Natchez and Adams County for the opportunity and look forward to continuing to grow our operations in the area and the state of Mississippi.”

The Natchez terminal is expected to start receiving shipments as early as late 2012.

“The investment, the jobs and the commitment from Genesis is big in itself, and the significant rail volume for our line in particular is enormous,” Russ said. “This puts the rail in safe harbor. It is huge rail traffic that solidifies the business end of that line.”

In September, the parent company of Natchez Railway filed a petition with the Surface Transportation Board for abandonment for the 66-mile Natchez-to-Brookhaven line. In November, the company withdrew the petition and released a statement saying it was committed to long-term partnership with local shippers.

“It has always been understood that we had to increase the rail traffic and volumes in order to make the line more viable, and this does it in an overwhelming capacity,” Russ said.

“I think it helps us in our future endeavors with other industries as well. It was something out there that was always a question mark and something we were constantly working to mitigate, and I think now it demonstrates the ability of that line to accommodate significant rail traffic.”

At the port

Russ said Genesis already owns a terminal located between the Riverside Central Warehouse and the Enersteel facility at the port. The terminal has been occupied by Tessenderlo Davison Chemicals.

“We are fortunate in the fact that TDC is owned by Genesis, so they are already familiar with the terminal that is there,” Russ said.

Natchez had to compete with sites in Louisiana and Texas for the project.

“They have got multiple terminals through their system, so it was really an opportunity to compete for business within the Genesis Energy company,” Russ said.

As the project approaches completion, port visitors will begin to see new infrastructure, such as new tanks and piping appearing. Adams County will also invest approximately $1.1 million in a rail car loading and unloading system to handle the dilbit and diluent. Construction will begin as soon as engineering for the project is completed.

A $400,000 Community Development Block Grant and a $700,000 rail loan from the Mississippi Development Authority will fund the public infrastructure investment.

The rail loan is serving as a match for the CDBG, Russ said, and the agreement between the company and the county means that the county will never pay for the infrastructure improvements out of pocket.

“Our lease agreement with them is that as we build the public infrastructure out there, we are leasing the public infrastructure to them, and that covers the debt service on that fund,” Russ said.

The agreement for the project — which included the Adams County Board of Supervisors, the Adams County Port Commission, Natchez Railway and Genesis — took approximately seven months to complete, Russ said.

“The river will be, and is, our interstate,” Russ said “We are committed to growth from, and on, the river, and a vital part of that continues to be adequate and reliable rail service. This is a perfect example of why quality rail is important and why quality port facilities are important.

“Without both or the ability to put them in place, this project would have gone someplace else, and we are glad we could compete and win this business for our area.”

Officials respond

Gov. Phil Bryant said he was grateful Genesis looked to the Adams County facility when making its decision.

“Mississippi has the port facilities, transportation network and business climate needed to support energy industry growth and play an important role in meeting North America’s energy needs.”

MDA Executive Chairman Brent Christensen said the announcement demonstrates Genesis Energy’s belief in Mississippi’s business climate and workforce.

“I commend the company for its continued investment in southwest Mississippi, and I am proud MDA was able to work with Natchez Inc. and the Adams County Board of Supervisors to assist with infrastructure improvements to support this project,” he said.

Adams County Board of Supervisors President Darryl Grennell welcomed the project to the area, saying, “The Adams County Board of Supervisors is pleased to continue to expand economic opportunity in our port area and to work with a Quality Company such as Genesis Energy. This is a significant project for Adams County in many ways including jobs, investment, rail and port.”

Adams County Port Authority Director Anthony Hauer said the port was pleased to be a major part of the agreement.

“We are excited to be able to work with and accommodate Genesis with this significant expansion,” he said.