North Dakota's oil boom is bringing crude oil — and jobs — to the Port of Vancouver.
Tesoro Corporation and Savage Companies said Monday they've launched a joint venture to build and operate facilities to store, load and unload crude oil at the port. The crude oil would be shipped to the port by rail from the Bakken oil formation in North Dakota. Then it would be hauled by ship to refineries in Washington, California and Alaska for domestic purposes, including gasoline for cars and trucks.
Under the venture, which requires approval by the port's three elected commissioners and regulatory agencies, the companies would spend up to $100 million to construct the new facilities. Construction work would generate an estimated 250 temporary jobs, according to port officials. Operation of the crude-oil facilities, which the companies hope to launch in 2014, would create an estimated 50 to 80 permanent jobs.
The companies would own the facilities, designed to initially handle 120,000 barrels per day with the potential to expand to 280,000. However, Tesoro and Savage need to secure a ground lease with the port, which initially is expected to be for 10 years. The public will have a chance to weigh in on the matter: The port's Board of Commissioners is expected to decide a lease deal by June. Likewise, a public vetting will occur before Washington state's Energy Facility Site Evaluation Council, a one-stop place for evaluating requests for permits to build major energy facilities.
The joint venture's proposal comes as backers and critics of plans to export coal from the Pacific Northwest to Asia square off over the future of energy, economic growth, the environment and global climate change.
Dan Riley, vice president of state and local government affairs for Tesoro, said he expects it will take nine to 18 months for the joint venture to secure the necessary permits. "We have a permit team that will work through that," he said. "There will be a number of opportunities for stakeholders to comment during that process." Actual construction of the joint venture's proposed facilities would take another nine months.
Theresa Wagner, the port's communications manager, said more details of the project need to be worked out, including lease terms. "We're going to keep going through that due diligence," she said.
'Another piece of that puzzle'
The port's West Vancouver Freight Access project, a $275 million expansion of the port's rail network that's 50 percent complete, was crucial in enticing Tesoro and Savage to do the deal, port officials said.
"We're starting to see some of the return on that now," Todd Coleman, the port's executive director, said of the port's investment in public works to attract private employers.
For the port, the deal also means a further diversification of its cargo mix, which helps the port weather dips in the economy. Crude oil would be a new addition to the liquid bulk materials the port handles, including diesel and jet fuel.
"This is another piece of that puzzle," said Wagner, the port's communications manager.
Coleman said the port began testing the market for such a deal late last year, putting out a proposal to assess the logistics of and interest in handling crude oil at the port.
Riley, the Tesoro vice president, said the port is closer to Bakken than any other port in the nation. The Port of Vancouver, he added, is well-positioned to act as a "hub for the distribution of North American crude to West Coast refineries."
Tesoro is not new to the port. It's been a tenant there since 1985, handling gasoline and diesel.
Port officials said Tesoro and Savage possess a strong record of running clean and safe operations. Under the joint venture, crude oil would be hauled by rail from Bakken to the port's Terminal 5 rail system. From there it would run, by pipeline, to a storage facility. Then it would be piped to Terminal 4, where it would be loaded onto ships. Altogether, three sites at the port totaling about 30 to 35 acres would be used in the operation.
Riley said Tesoro has a long history of doing business in Washington state and that "we well understand the environmental requirements to operate" in the state. "We embrace those," he said. "We think we're the right kind of business to take on this kind of operation, along with Savage."
The proposal by Tesoro and Savage comes amid ongoing controversy over fossil-fueled economic growth and calls to shift to more renewables. That controversy includes a fight over whether certain sites in the Pacific Northwest should export coal to Asia. There are no coal export facilities at the Port of Vancouver, and there are no plans in the works for such a facility.
Citing the overwhelming scientific evidence of human-induced global climate change, critics press to reduce carbon emissions to curb harmful environmental impacts, including severe weather patterns.
Riley said climate change is an issue that will take decades to tackle "as policymakers consider what our position is on fossil fuels." He said fossil fuels will still be needed "for the foreseeable future in order to meet our transportation needs."
For reasons of security and stability, Riley said, it's better to have more domestically produced crude oil "than to rely on foreign crude."