Houston-based Kinder Morgan is backing away from its effort to lease the Port of Wilmington.
In a letter to state officials Thursday, Kinder Morgan President John Schlosser said it is “suspending our efforts to secure a long-term lease arrangement with the Port of Wilmington," citing issues with the head of the local Longshoreman’s union as the reason.
In a statement, Gov. Jack Markell said it is “unfortunate” the state may miss an “opportunity for increased jobs as a result of additional capital investment beyond what the state can afford.”
Schlosser called Julius Cephas, president of the International Longshoreman's Association Local 1694, “volatile” and “antagonistic” to the point that a productive relationship is “impossible.”
WDDE's attempts to reach Cephas were unsuccessful.
Democratic State Rep. John Kowalko, who had raised questions about the overall structure of Kinder Morgan deal, said he was surprised by the move, but would not declare Kinder Morgan's decision a victory.
"Let me qualify this. I’m not displeased it did not go through. I had a lot of concerns about what their intentions were in taking over the Port and whether they would adequately address the needs of the Port," said Kowalko. "What they had presented as their original proposal or pre-proposal was certainly woefully inadequate for me to even consider supporting it."
Kowalko adds the letter's reference to issues with union leadership with the signals Kinder Morgan has a lot of animosity toward the union.
In the letter, Schlosser said when Kinder Morgan first came to Delaware to negotiate a lease with the state it offered a three year deal with no reduction in workforce as a staring point for negotiations with the local union, calling it "a significant good faith gesture, not offered to many in the workforce these days."
Kowalko says it was hardly a good faith gesture.
"That's the length of the contact there. That's not a promise. That's just saying we're not going to break an agreement," said Kolwalko. "That also left the door open for them to do whatever they wanted moving forward after that time. So, in a way, I think it just showed their true intentions."
Schlosser, in his letter, said Cephas' declared intention not to meet with Kinder Morgan again until the General Assembly approved a lease deal, combined with some legislators' position that they would not approve a lease deal unless a new union deal is in place puts the company in "an impossible position."
"Simply put, we have choices in terms of where we will invest substantial resources and the current union leadership at your facility does not make Delaware a good choice at this time," Schlosser wrote Port Chairman Alan Levin in his letter. Levin is also Director of the Delaware Economic Development Office.
Kowalko says he is concerned about the long-term health of the Port and believes the state needs to invest in "valuable state assert." He suggested state officials consider investing in the neighborhood of $150 million over 15 years to upgrade the Port of Wilmington and ensure its long-term stability.
"It would be irresponsible of us not to consider making sure the port has enough money to do its upgrades, to do its improvements, to be come even more competitive than it is now. That's our responsibility to make sure that happens," said Kowalko.
Last month, the Port of Wilmington made a $20 million request for capital improvement funds at its Bond Bill committee hearing.