In its more than 50 years of doing business in the Port of Providence, Hudson Companies has seen much of its profit come from the color grey – the color of the asphalt it supplies, that is. But as the price of energy continues to soar, Hudson is looking to a new color for its profits: green. President and COO Francis J. O’Brien spoke with PBN last week about some of the environmentally friendly business initiatives the company is looking to initiate in the near future.
PBN: In your view, what is pushing the need for alternative energy sources?
O’BRIEN: After World War II, France’s and England’s positions as world powers had been diminished. Japan and Germany – their military complex was reduced significantly, if not eliminated. And Russia was self-sufficient with petroleum. So the only real strong buyer of petroleum after World War II was the United States. As a consequence, we were pretty much able to tell the petroleum producers what we were willing to pay. We set the world market. Now, with emerging economies, specifically India and China, there are a lot of buyers for petroleum products. … Demand is up in these emerging economies and the price is through the roof. … Alternatives are going to have to be found.
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PBN: And what sources of alternative energy look attractive to you?
O’BRIEN: Biofuel is an emerging industry right now, but I don’t think we have an answer [to that] right yet. Ethanol is in the news quite often, but there are a lot of critics of ethanol, probably with good reason. … But down the road, when cellulose seed stocks and especially algae seed stocks – there’s a lot of work being down with that right now – [are further developed], I think they will have a significant impact on the market.
PBN: So where does Hudson sit in this discussion?
O’BRIEN: We’ve recently renovated and reactivated an old light-oil terminal in the Port of Providence and we have an arrangement there with a company to distribute ultra-low sulfur diesel as well as No. 2 heating oil. … We’ve activated that and renovated that, and there are new tanks under construction, even as we speak. Right now, biofuels are [about ready] to be distributed from there. But it is our plan, hopefully within the next 12 months, to begin construction of a facility that will actually produce biofuel.
PBN: What’s holding back the construction of that facility?
O’BRIEN: There are a number of competing technologies. [We have to determine] which is the best technology to use to produce biofuel, which ones have multiple seed-stock capabilities. Those are just questions that need to be answered to show us which way we should go. But we have the site, we have the land ready to go, and that is our plan.
PBN: Where would it be located?
O’BRIEN: It’s in the Port of Providence, [on the same site] as the recently-renovated terminal.
PBN: How long until the distribution facility is functional?
O’BRIEN: We’ve put in all the blending equipment. They’re in the calibrating process right now. Once everything is fully calibrated I would hope that [this week] we would begin the distribution of biofuels in Providence.
PBN: Is there a strong demand for biofuel coming from the customers?
O’BRIEN: There’s a significant amount of interest. They’re kind of waiting on us. We get calls on a fairly regular basis asking, ‘Is it ready yet?’
PBN: How much of that demand is coming from home-heating-oil companies?
O’BRIEN: In Rhode Island alone, about 160-million gallons of home heating oil is used per year. … That’s a significant market, I think. And I think it’s going to continue to be. … But it’s been a slow evolution. At first, a lot of the furnace manufacturers were saying, ‘No, we’re not going to warranty your furnace [if you’re using biofuel].’ But now, most of them have backed off of that. … In fact, most of the people that have called us … are in the heating oil industry.
PBN: Is the biofuel effort at Hudson a way to complement the company’s existing asphalt business or is this viewed as a long-term replacement?
O’BRIEN: I think the asphalt has been the main focus and will continue to be. But everything is changing so much. In my 28 years working for this company … we’ve sold asphalt for as low as $17 per ton. And now it’s selling for [more than] $400 per ton. I think in time, something is going to be found to … come up with alternative paving materials.
PBN: Seeing as asphalt is used in a large portion of municipal and state projects, have the budget woes of the state impacted Hudson?
O’BRIEN: Rhode Island is just one of many states that is facing budgetary problems and restrictions. So early on, when the planning was done for a particular highway project, if they were planning on spending $200 per ton on a particular highway project, now it’s $400. They don’t have any extra money to spend. So that will cut in half, theoretically, the amount of work that they would be able to do. That problem will have to be solved at some point.
PBN: The company has instituted several ‘green’ initiatives, including the use of biofuels in its own fleet of trucks. Has Hudson found that green is synonymous with expensive?
O’BRIEN: I think there’s a perception out there that if you want to become a green company, that’s going to cost you money. But we have started doing things through internal energy audits and things of that nature where we’ve done something that is better for the environment and has in fact saved us money. •
INTERVIEW
Francis J. O’Brien
Position: President and COO, Hudson Companies
Background: O’Brien joined Hudson Companies in 1980, initially serving as executive vice president. In 1987, he was elevated to his current post of president and chief operating officer. Before joining Hudson, he worked in the sales department of Mack Truck Inc.
Education: B.A. in English, 1971, University of Rhode Island.
Residence: Saunderstown
Age: 59
