Logistics & Distribution

Call of the Wild


Have a terminal? Want to expand and profit?

The consider doing what Wolf Lake Terminals did: retrofit the facility to produce biodiesel fuel on site.

At the Petroleum Packaging Council meeting in the spring, Wes Berry, director of engineering at Evergreen Renewables, told a packed room how Wolf Lake Terminals modified its existing facility to produce biodiesel for Evergreen and other customers- at less than half the cost of building a grass-rots biodiesel plant.

Wolf Lake Terminals, well known as a provider of terminaling, blending and packaging services to lubricant, base oil and additive companies, invited LubesnGreases to Hammond, Ind., to see first-hand its new venture in alternative fuels.

The Hammond Depot

Built by the federal government in the mid-1950s a the eight of the Cold War, Wolf Lake Terminals facility on the shores of Wolf Lake is outside the hurricane zone, near several interstate highways, on the Idiana-Illinois state line and only minutes from downtown Chicago. Used by the Defense Logistics Agency to store vegtable oils, lubricants, whale oil and various military equipment and supplies, the depot includes three 200,000-square-foot warehouses with six-inch concrete floors and a high-hazard dry sprinkler system, built to withstand bombs.

Liquid storage tanks, today numbering 130 with 22.5 million gallons of storage, were built on six-foot concrete foundations, all diked and segregated. The facility was built before there were a lot of standards for tanks, Kip Middendorf, marketing and sales manager, explained when LubesnGreases visited in June. But its a nice system, that even exceeds todays standards.

In the late 1960s, the U.S. General Services Administration, owner of the Hammond Depot, parceled the property and put it on the market. Long & Co., a partnership of Elwood and Flora Long (Kip Middendorfs grandparents), Woody and Viola Long and Garland and Sydney Middendorf, looking for expansion opportunities, bid on the Hammond property.

Long & Co. closed the contract in 1974, and Wolf Lake Terminals opened for business. The affiliated companies that make up the operation include Long-Middendorf Corp., Post Warehouse Corp., Wolf Lake Terminals Inc. and others. Elwood Long died in 1984, and the companies are owned today by Sydney and Garland Middendorf, and Woody Long and Woodys son Ken. Ken Long is terminal manager at the familys Tanco Terminals located at the International Port of Indiana, and he takes on special projects and new tank construction for the businesses.

Tremendously entrepreneurial, the family-owned businesses expanded over time through cash flow, without incurring debt, said Kip Middendorf.

More Than Lubes

A first customer was the Amoco Whiting refinery, Middendorf said. Amoco tested us by shipping railcars of water, to be tanked and returned without contamination, to prove that our start-up could do it. BP Whiting [Amocos successor] remains a customer today.

Wolf Lake today is 90 to 95 percent occupied, said Middendorf. Weve expanded services, particularly in the last 10 years, adding blending, laboratories and processing. Now it goes way beyond bulk liquid storage.

We serviced white oils for what was then Witco, he continued, and their customers came to us. In the early 1980s we started contract blending and packaging lubricants. That market developed quickly for us.

Weve had a long relationship with Infineum, providing storage and distribution. That grew into interest by other additive companies.

Our fees are always even and fair to competitors. We dont compete with our customers, and we charge consistent fees to all customers and hold proprietary information in great confidence.

Over the past several years, Wolf Lake Terminals has transitioned from lubricants into vegetable oils, initially storing raw materials and finished products for other biodiesel makers.

The lubricants industry is very important to us, but other markets are growing faster, Middendorf explained. Alternate fuels are exploding – thats the big growth area. Lubes are now a smaller percentage of our business.

For many years, people considered this a lubricants terminal. Now we have Rapid Rail Services, a new rail car cleaning facility; a deicer blending facility; a fuel additives facility. And we have a biodiesel facility.

Big on Biodiesel

Evergreen Renewables began discussions with Wolf Lake Terminals about biodiesel production in 2001, leading to a serious assessment of the markets potential. By mid-2005, Wolf Lake Terminals had begun the permitting process required to modify its facility for the biofuel production. With permits finally secured, retrofitting began in late 2005, and in May 2006 production was under way.

We used preexisting assets retrofitted to make biodiesel, Middendorf said. Overall, it was about a $10 million investment by Wolf Lake and Edible Oils [Evergreens parent company]. Wolf Lake Terminals now has a permitted biodiesel facility.

To make biodiesel fuels, the facility reacts soybean oil with methyl alcohol, forming biodiesel and glycerin. The glycerin is separated and stored for sale, and the biodiesel fraction is heated to remove methanol. The final step is post-treating to remove remaining glycerin and soap impurities.

Now we can produce nine million gallons per year, said Middendorf. I believe we could produce up to 60 million, but our state operating permit limits us for now.

Wolf Lake Terminals now has four biodiesel customers who compete against each other out of the facility, Middendorf said, the same as lube companies in the past. Thats the role of a for-hire terminal. The product has to leave in the highest quality, and well documented.

At the facility, biodiesel production takes place from early morning until night, and distribution – trucks moving in and out – takes place day and night, seven days a week. Wolf Lake Terminals handles the truck loading, taking about 40 minutes per order, on average.

Biodiesel is our fastest growing business now, Middendorf said. The challenge for biodiesel is distribution, getting it to customers. Access is one of our tremendous assets.

Biodiesel is like real estate. Its location, location, location. Our facilities are at the center of one of the largest biodiesel markets in the country, partially due to Illinois state incentives.