Port of Vancouver weighs testimony from backers, opponents of planned oil facility

By Aaron Corvin, Columbian port & economy reporter

Published:

Updated: June 27, 2013, 6:41 PM

 

Tesoro

Tesoro has been a tenant at the Port of Vancouver for years, handling gasoline and diesel.

Based in San Antonio, Texas, the publicly-traded company is one of the largest petroleum refiners and marketers in the United States.

It has more than 5,700 full-time employees — 1,350 of whom are covered by collective bargaining agreements. It owns and operates seven petroleum refineries in the western United States, according to a recent filing with the U.S. Securities and Exchange Commission.

The company reported net income of $93 million, or 67 cents per share, in this year's first quarter. That compares with net income of $56 million, or 39 cents per share, for the January-to-March period in 2012.

The Port of Vancouver got an earful Thursday from backers and opponents of a proposed crude-oil transfer terminal who packed the Board of Commissioners' hearing room to trumpet their arguments.

Executives with Tesoro Corp. and Savage Companies, who want to build the terminal to handle as much as 380,000 barrels of oil per day, told commissioners the project capitalizes on rising U.S. oil production, boosts the local economy and will operate in ways that minimize harm to the environment.

"A lot of family-wage jobs will be created," said Kent Avery, a senior vice president for Savage.

Critics told commissioners the project, which would haul oil by rail and move it over water, conflicts with the port's own sustainability goals, increases the risk of oil spills in the Columbia River and further fuels global warming.

"This is a really big gamble," said Jim Eversaul, a Vancouver resident and retired U.S. Coast Guard chief engineer.

Commissioners took public testimony as part of two back-to-back workshops. The first workshop was intended to give commissioners an understanding of the state's role in examining the proposed crude oil facility. The second featured a presentation by Tesoro and Savage representatives. Thursday's hearings lasted for roughly two hours, with more than 55 people in attendance.

Commissioners made no decisions. Port managers are negotiating the terms of a lease agreement with Tesoro and Savage. Commissioners may decide a proposed lease arrangement on July 23.

Such a decision won't end the matter, though. The state Energy Facility Site Evaluation Council will scrutinize the proposed crude oil facility and make a recommendation to Gov. Jay Inslee, who has the final say.

The council's review could take up to a year or more. The companies hope to launch an oil terminal at the port in 2014.

A full examination

Eleven Washington and Oregon refineries and port terminals are planning, building or already operating oil-by-rail shipments. That list includes the proposal by Tesoro and Savage, which would be the largest such facility in the Pacific Northwest, according to Sightline Institute, a Seattle-based nonprofit environmental research group.

A U.S. oil boom is spurring companies to haul oil by rail to the Northwest from the Bakken shale formation in North Dakota, where oil is extracted by hydraulic fracturing.

Under the plan by Tesoro and Savage, Bakken crude oil would be shipped to the port by rail for transfer to ships bound for refineries in Washington, California and Alaska. The oil would then be processed for domestic purposes, including gasoline for cars and trucks.

The crude oil facility would be designed to "receive a variety of North American crude," according to Kelly Flint, senior vice president and counsel for Savage.

The companies would spend up to $100 million on new facilities at the port. Construction work would generate an estimated 250 temporary jobs. Initially, the operation would create up to 80 permanent jobs. At full build-out, Avery said, employment could reach 120 workers, with most of them hired locally.

Flint told commissioners that once they approve a lease agreement, the companies will file a permit application to the state Energy Facility Site Evaluation Council.

The companies' proposal will undergo a full examination, including the production of an environmental impact statement.

But critics who testified Thursday urged commissioners to prevent the companies' proposal from reaching the Energy Facility Site Evaluation Council.

Marla Nelson, an attorney with the Portland-based Northwest Environmental Defense Center, said the planned crude oil facility represents a threat to the environment and contradicts the port's commitment to environmental stewardship. At one point during the hearing, Commissioner Brian Wolfe asked about the port's expected return on investment if it gives the project a green light.

Todd Coleman, the port's executive director, said the port will soon have a public conversation on lease terms. Those discussions are slated to occur during a port commission hearing and workshop July 9.

Oil boom, risks

Avery, a Savage senior vice president and business unit leader for petroleum rail solutions, said the U.S. produces 7 million barrels of oil per day, which is the "highest point in 21 years."

"This is about energy independence," he added.

Eric Haugstad, director of contingency planning and emergency response for Tesoro, said the company has state-of-the-art equipment to respond to oil spills, including a containment boom that's effective in currents of up to 5 knots and that can hold up to 95 barrels of oil in a separator bag.

The company is "looking to place these systems here in Vancouver," Haugstad told commissioners.

Lehman Holder, a Vancouver resident and Sierra Club leader in Southwest Washington, urged commissioners to say no to the oil terminal, which will increase train traffic and intensify the risk of oil spills. The possibility that the port could receive oil from the controversial Canadian tar sands, not just the Bakken, is yet another reason to reject the project, Holder said.

The continued burning of fossil fuels, such as oil and coal, "reduce Earth's capacity to support life in the future," said Ken Ferguson, a Klickitat County resident. Noting that the amount of heat-trapping carbon dioxide in the atmosphere recently passed 400 parts per million, Ferguson said the proposed oil terminal "is just going to make the problem worse."

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