By the end of the year a Washington state panel will recommend to Governor Jay Inslee whether to proceed with the proposed Tesoro Savage oil terminal at the Port of Vancouver, in Clark County. If constructed, the Vancouver Energy project would allow for the transfer of mostly North Dakota Bakken crude oil from incoming freight trains to water-borne vessels bound for refineries along in California, Washington, and Alaska. No refining of oil would occur at the site.
The proposed $210 million terminal would occupy 42 acres of port property, in and around Marine Terminals 4 and 5. It would have capacity to handle 360,000 barrels of oil per day.
Economic Impact Is Immense
The economic potential is immense. According to a 2014 study commissioned by Tesoro Savage, the proposed terminal would add $2 billion to the Clark County economy by 2030, $1.6 billion of that added income of terminal workers
The construction phase would create 320 full-time jobs, and generate $124.8 million in value to the local economy. Once open, the terminal would yield another 1,081 direct and indirect jobs, and add an additional $115-$150 million to the economy each year.
Site Review Three Years And Running
The state hearings have been a long time coming. Tesoro Savage Petroleum Terminal LLC first signed a lease with the Port of Vancouver in July of 2013. In August, 2013 the partnership filed a site application with the Washington Energy Facility Siting and Evaluation Council (EFSEC). The whole process was supposed to take about one year. However, procedural delays slowed things to a crawl.
Post-Election Choice By Governor
Now finally, after a month of public hearings ending July 29th, EFSEC will perform final review of the project and issue a final recommendation to Governor Jay Inslee by the end of the year.
A decision by the Governor’s Office would then come no earlier than late January 2017, well after the 2016 gubernatorial election. Voters on November 8 will choose between a second term for Inslee, or replacing him with Republican challenger Bill Bryant. The next gubernatorial term begins in early January.
Some state legislators, and several labor organizations favor the project. Opponents include the City of Vancouver and environmental groups.
Traditionally, West Coast states have been able to satisfy much of their energy needs from the crude fields in Alaska and California, said Jarred Larrabee, General Manager of Vancouver Energy. That is the subsidiary created by Tesoro Savage, which would operate the facility.
However, both those sources have been in steady decline since 1988. In that year, Alaska’s North Slope crude field was producing 722.4 million barrels of oil. In 2015 that flow had dwindled to 169.5 million.
Voting With Their Feet – On The Accelerator Pedal
Yet demand for petroleum products has continued to grow in the Western United States, thanks to economic growth and a steady increase in U.S. vehicle miles travelled (VMT).
Data from the Federal Reserve Bank of St. Louis show that U.S. VMT has tripled since 1971, and although it flattened from 2008 through late 2014, it is again on the rise.
A report from the Washington State Department of Transportation (WSDOT) notes (p. 18) that VMT in the state has tripled since 1965 and will continue to rise modestly until 2022, when it will drop slightly.
Bakken Crude Flow Grows
In order to satisfy fuel demand, West Coast refineries have been scrambling for new sources of crude oil. Until recently, much of this came from foreign imports. Then came the boom in oil production from the Bakken crude fields in North Dakota. From January 2005 to April 2016, oil production in that state grew more than 11-fold, from 2.8 million barrels a month to 31.2 million per month.
This rapid rise in production has made domestic oil from the mid-United States a viable option for West Coast refiners. The challenge was developing supply-chain infrastructure.
Port Of Vancouver Poised For Growth
Just as North Dakota oil production was taking off in 2010, the Port of Vancouver completed several strategic improvements aimed at attracting investment from the petroleum industry.
The $200 million West Vancouver Freight Access Project included new rail connections to the Port’s five terminals, and a 35,000-foot loop track to allow for the handling of much longer trains, like the ones used to haul crude oil.
In addition, the Port benefitted from the $200 million Columbia River deepening, opening up the waterway to much larger container ships.
According to Larrabee, these investments made Vancouver the closest deep-water port to Bakken Crude fields, and therefore the best possible location for an oil-by-rail terminal.
Sen. Rivers: ‘Economic Opportunity’ Key
State Sen. Ann Rivers (R-18) told Lens, “The more economic opportunity we have here in Clark County, the more likely people will stay here to work, and the more likely families will stay here to live and contribute to our community.”
Labor, Business Support Strong
The Washington State Labor Council AFL-CIO, which represents hundreds of local unions in the state, has expressed support for the project. So have the Washington Building and Construction Trades Council, and the International Brotherhood of Electrical Workers (IBEW) Local 48.
Matthew Hepner is Executive Director of the Certified Electrical Workers of Washington, which represents a broad array of IBEW locals around the state. He told Lens the terminal is “a good, solid project that will bring lots of middle-class jobs to the local economy.”
Washington’s trade-dependent economy could see ripple benefits from any international oil exports leaving the Port of Vancouver, Hepner added. Congress last year lifted the ban on U.S. oil exports.
Decreasing Reliance On Oil Imports
Decreasing U.S. reliance on oil imports figures into the calculations for some supporters.
Backers of the Vancouver Energy project also include a business-labor group, the Washington Coalition For Energy Independence. Members include Vigor Industrial, Foss Maritime Company, and Norton Lilly International. The coalition states the project, “has the potential to displace 30 percent of the crude oil currently imported from foreign countries for use on the West Coast.”
Rebecca Ponzio, Oil Campaign Manager for the Washington Environmental Council, told Lens that her organization was concerned about risks including train derailments and oil spills.
Data from the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) indicates such incidents are exceedingly rare. In 2015, PHMSA recorded 34 train derailments, slightly below the average of 35 derailments in the past ten years and considerably down from a high of 54 in 2007.
A July 2015 report from the American Association of Railroads states that 99.99 percent of the 1.4 million car loads of crude oil shipped in the U.S. from 2000 to 2014 have arrived “without a release caused by accident.”
There have been only four derailments of tanker cars in the past 10 years in Washington state, none of which resulted in any injuries. The cost of those derailments has totaled $211,800, for an average cost of $52,950 per incident. According to PHMSA data, there has only been one fatality as a result of tanker train derailment in the United States since 2006.
Bipartisan Bill Passed To Boost Safety
In 2015 the State of Washington passed HB 1449. The bipartisan measure raised insurance requirements on the industry, and created weekly reporting requirements for railroads moving crude through Washington communities. The state has also apportioned funds for increasing the number of rail safety inspectors, and is currently considering rules that would mandate railroads have immediate response plans for derailments.
Oregon has not yet approved similar legislation, while California has a number of state-safety measures in place.
At the federal level, the U.S. Department of Transportation (DOT) last year crafted new standards for crude oil tanker cars that included thicker hulls and enhanced braking systems.
Larrabee said that under the agreed lease terms with the Port of Vancouver, the Tesoro Savage terminal will only accept rail cars that have already incorporated the additional DOT brake and hull strength specifications, well ahead of the proposed phase-in schedule. Marine vessels leaving the terminal would also be required by the company to have a tug-boat escort, which no current law mandates.
Tara Lee, Deputy Communications Director for Governor Inslee told The Lens that the Governor’s office was still reviewing the project, and had no further comment.
Other jobs-rich fossil fuel transport projects to meet market demand have run into obstacles from the Governor’s administration.
Inslee’s Department of Ecology played a significant role, along with the U.S. Army Corps of Engineers, in defeating a proposed Whatcom County coal export terminal earlier this year.
Ecology has also posed what some call an “incomprehensible” standard for an environmental assessment of another proposed coal export facility, in Longview. It involves required modeling of the carbon emissions in overseas markets resulting from the burning of the projected coal shipped from the site.