Executive discusses oil-terminal plan, says safety a top priority

Savage senior vice president speaks at Vancouver Rotary luncheon

By Aaron Corvin, Columbian port & economy reporter

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A representative of the joint venture to build the biggest oil terminal in the Pacific Northwest at the Port of Vancouver said Wednesday his team expects to file the construction permit application to a state regulatory body by the end of this month.

Kelly Flint, senior vice president and general counsel for Savage Companies, made that and other remarks during a luncheon presentation to the Rotary Club of Vancouver at the Red Lion Hotel Vancouver at the Quay.

Savage and Tesoro Corp. want to handle as much as 380,000 barrels of crude oil per day, hauled by train from the Bakken shale formation in North Dakota, where oil is extracted by hydraulic fracturing. Port commissioners on July 23 approved leasing 42 acres to the companies, despite public testimony overwhelmingly against the oil-handling plan.

The Tesoro-Savage proposal now must undergo an examination by the state Energy Facility Site Evaluation Council, or EFSEC, which would make a recommendation to Gov. Jay Inslee, who has the final say.

Flint said the Tesoro-Savage proposal falls under the jurisdiction of EFSEC because of the high volume of crude that would move through the port. In addition to the EFSEC review process, which could take a year or more, the companies must secure another permit from the U.S. Army Corps of Engineers for dock work, Flint said.

Flint delivered his remarks on the same day that the U.S. Energy Information Administration issued a report showing that oil-by-rail infrastructure on the West Coast is expanding, with more planned. Meanwhile, the U.S. Federal Railroad Administration sent a July 29 letter to the American Petroleum Institute saying it's investigating the safety of moving oil by rail, including whether chemicals used in hydraulic fracturing are corroding tank cars.

The federal investigation comes after a parked train carrying crude oil from North Dakota's Bakken rolled, derailed and exploded in Lac-Megantic in Quebec on July 6, killing 47 people and vaporizing a large swath of the downtown.

'They live with that'

During Wednesday's event, Kelly delivered a PowerPoint presentation covering multiple topics, including the U.S. oil boom, local job impacts and public safety. The Tesoro-Savage project would create an estimated 250 temporary construction jobs and, initially, 80 full-time jobs, Kelly said. At peak operation, the companies would employ "110-ish" full-time workers, nearly all of them from the local market. The peak full-time job estimate was different in June, when another company official said it could reach 120 full-time workers.

After his presentation, Kelly took questions from Rotary members. One person cited news reports that the oil and rail industries are fighting federal attempts to improve safety for the type of rail car involved in the Quebec calamity. Then the person asked Kelly what Savage and Tesoro's position is on rail-car safety.

Referring to the catastrophe in Quebec, Kelly said BNSF Railway, which would haul oil to the port under the Tesoro-Savage plan, has policies "in place that would not have allowed that to happen." Kelly said BNSF is a top-notch, mainline rail operator, as opposed to the short-line operator of the runaway train in Quebec.

He said Tesoro — not BNSF — owns the oil tank cars. Tesoro "has ordered new cars for this facility," he said, referring to the proposed oil project at the Port of Vancouver. Kelly added, "We intend to address all safety issues well in advance" of launching operations of the oil-handling facility at the port.

During his presentation, Kelly also said BNSF Railway would never leave a train unattended. And the region's mainline system, coupled with the port's Terminal 5 rail loop, will enable a "direct handoff," Kelly said, with oil trains completely entering the port and no decoupling or interruptions.

"This is a much safer way to do it," he said.

Kelly also responded to questions about Tesoro's tarnished environmental and safety track records, including the explosion in 2010 that killed seven people at the company's petroleum refinery in Anacortes. Tesoro received a $2.39 million fine — the largest ever assessed by the Washington State Department of Labor & Industries — following a state investigation.

Kelly said the explosion was something no one expected and that in its aftermath Tesoro and the overall industry changed and made safety improvements. "They had a tragedy at the refinery," Kelly said. "They admit that, and they live with that."

Labor & Industries sees it differently: Saying the blast was entirely preventable, the agency cited Tesoro for 39 "willful" violations and five "serious" violations of state workplace safety and health regulations.

Aaron Corvin: http://twitter.com/col_econ; http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com