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At a special meeting held yesterday, the port commission of the Port of Houston Authority approved a 25-year lease agreement with Battleground Oil Specialty Terminal Company LLC. (BOSTCO) for approximately 55 acres of port authority-owned property adjacent to Peggy Lake and on Barnes Island.

Bostco plans to build a 6.5 million barrel black oil terminal on the land, which will handle residual fuel oil, slurry oil, blendstocks, vacuum gas oil and crude oil.

During yesterday's meeting, the port commission also approved the issue of a marine construction permit to BOSTCO, as well as a dredged material agreement with BOSTCO for the placement of approximately 2.2 million cubic yards of dredged material.

Consideration of these items was continued from the last Port Commission Meeting on October 25th, to allow BOSTCO and Enterprise Refined Products Company, which has operations adjoining the site, to further discuss matters voiced by Enterprise at that meeting.

Representatives from the companies gave brief presentations to the port commission at the meeting. "We appreciate the extra effort to provide us an opportunity to look at the design and safety aspects of the project," said Lynn Bourdon, Senior Vice President at Enterprise. "We remain committed to operational safety and feel very positive about the outcome."

"The liquid terminal will be the first "greenfield" terminal built at the Port of Houston in more than 25 years and, when completed, will result in 75 full-time jobs," Jeffrey R. Armstrong, President of Terminals for Kinder Morgan, told the port commission.

BOSTCO is a joint venture between Kinder Morgan and TransMontaigne Partners L.P.. The company was initially established by John McDonald, founder of Houston Fuel Oil Terminal, - the country's largest handler of heavy refining byproducts covering 310-acres of storage tanks and terminals.

McDonald established Houston Fuel Oil Terminal thirty years ago and later sold his stake in the company over time, but acted as an adviser until about four years ago.

BOSTCO now plans to compete with McDonald's former company in the niche market of black oil. It is planning to build the large-scale liquid bulk terminal on and adjacent to Barnes Island and requested the proposed lease to allow portions of BOSTCO's docks to be constructed on port authority-owned submerged lands adjacent to the port authority's Peggy Lake Dredged Material Placement Area, and storage tanks to be placed on filled submerged lands on Barnes Island.

The BOSTCO and Enterprise facilities will share use of a barge channel, which is also located over port authority submerged lands. As part of its permitting process, the port authority helped bring the companies together to forge a joint agreement on use of the channel.

Representatives of the Houston Pilots, U.S. Coast Guard, barge and tug operators, and the Seaman's Church Institute Center for Maritime Education, which provided bridge simulator facilities, all contributed to the outcome.