Clark County in national spotlight in fight over coal and oil terminals

By Aaron Corvin and Eric Florip

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photoKelly Flint, Senior Vice President and General Counsel for Savage, speaks at a Rotary Club meeting Aug. 14 in Vancouver.

(/The Columbian)

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To hear Ken Miller tell it, coal's rise as an export commodity in Southwest Washington is unstoppable.

"There is no local, state or federal regulation that this project can't meet or exceed," Miller, president and CEO of Millennium Bulk Terminals-Longview, said of his company's plan to export up to 44 million metric tons of coal annually to slake Asia's thirst for energy.

Miller's confidence is typical of energy producers, transporters and brokers who have put Southwest Washington and the Pacific Northwest in the spotlight with proposals to transform ports into key shipping hubs in a worldwide realignment of valuable oil and coal resources. Under 14 different plans and operations, Washington and Oregon ports would essentially serve as a vast transfer station for the coal and oil being extracted from America's heartland, where raw materials are sent to domestic and overseas markets demanding fuel and electricity for growth.

But if Miller and the owners of Millennium -- Ambre Energy and Arch Coal Inc. -- expected a warm welcome in job-thirsty Southwest Washington, they need to take a closer look. Regional and even national environmental activists, who see new oil and coal terminals as harbingers of increased carbon pollution that will hamper efforts to shift to clean sources of energy, have turned an eye to the Northwest and Vancouver.

Speaking to a capacity crowd at Clark College in July, Bill McKibben, the nationally known environmental activist and author, described the Northwest as a "choke point," one among several key battlegrounds where activists will make a stand to reduce or reverse the catastrophic impacts of climate change.

Vancouver resident Don Steinke, who's involved in the "Power Past Coal" campaign, shares McKibben's worries. He joined hundreds of people who converged on the Columbia River in July to protest fossil fuel exports.

"We've been concerned about global warming for a long time, but the battles have been elsewhere," said Steinke, a retired teacher. "The big policy decisions have been made in Washington, D.C. But now the big decisions are being made in Washington state."

It's a crisis that thrusts Clark County, whether it likes it or not, into an unfamiliar role: focal point in a war over how we live and do business on the planet.

'The cheapest route'

Shifts in the energy fortunes of nations and changes in transportation arrangements led coal and oil producers to increase their presence in the Northwest, no stranger to fossil-fueled consumption but also known for its embrace of conservation and renewables.

A recent U.S. Energy Information Administration report sums up coal's rise as an export opportunity: "With the combination of strong growth in world coal trade, high international coal prices, and declining demand for coal in the U.S. electric power sector, there has been a surge in activity and investment in port capacity expansion projects to facilitate the growth of U.S. coal exports."

Exporters want to haul coal by train to the Northwest from the Powder River Basin in Montana and Wyoming. "The cheapest route is through the Pacific Northwest," said Greg Adams, who heads the EIA's coal and uranium analysis team. The alternative is to ship it through Los Angeles, but a coal terminal there was shuttered years ago because of unfavorable market conditions.

Both coal and oil companies have found support locally among some regional government, business and labor leaders looking to generate what they say could amount to thousands of temporary construction and permanent jobs in a still-recovering economy. Those supporters include the Port of Vancouver, which recently inked a controversial lease deal with Tesoro Corp. and Savage Companies for what would become the largest oil terminal in the Northwest.

The plan must undergo an examination by the state Energy Facility Site Evaluation Council, which would make a recommendation to Gov. Jay Inslee, a Democrat, who has the final say. That process could take up to a year or more.

Other fossil-fuel proposals are far from being a done deal.

Initially, companies planned six different coal terminals in Washington and Oregon. A year later, the list is down to three, as predicted by BNSF Railway Chairman and CEO Matthew Rose, who told The Columbian in August 2012 that the market would support the development of two, "maybe three," coal terminals.

One of the surviving three, the Millennium plan, has its doubters. The Sightline Institute, a Seattle-based environmental research group, issued a study in February revealing that Australia-based Ambre Energy -- one of two owners of Millennium -- piled up $124 million in losses from 2005 through 2012.

Miller, CEO of Millennium, said Ambre "is a small startup company that has had success entering the coal business. The bottom line is once permits are approved there will be no shortage of investors for large infrastructure projects like this."

Altogether, the three coal-export plans -- two in Washington, one in Oregon -- would add more than 100 million tons of annual coal export capacity along the West Coast, which is currently "limited to a couple of million tons, primarily out of the Port of Long Beach in California," according to the EIA.

As for oil, its production in the U.S. is on the upswing after decades of decline, thanks to the new Midwest oil fields. But there are no major pipelines for moving crude from east of the Rockies to the West Coast, and transporting oil by ship through the Panama Canal is time-consuming and expensive, noted the Energy Information Administration in an Aug. 14 report. Hauling oil by rail, however, "is becoming a viable alternative," the EIA says, and oil-train infrastructure "has been expanding, with more planned."

As a refining center, Washington state is the closest destination for oil from Canada and from the Bakken shale formation in North Dakota. As a result, the state is "where most of the refineries have built or are in the process of building rail unloading facilities," according to the EIA.

In Clark County, the oil-market and transportation alterations point to the Port of Vancouver, which is the most direct link, by rail, from the Bakken, where oil is extracted by hydraulic fracturing. That direct link led Tesoro, the West Coast's largest refiner, and Savage to seek a deal with the port. They propose an oil-handling facility capable of managing as much as 380,000 barrels of crude per day. The oil would arrive by train, stored and later shipped to U.S. refineries.

Last month, Savage Companies executive Kelly Flint spoke to the Rotary Club of Vancouver. He acknowledged concerns about climate change. He said there's broad recognition of the need to develop alternatives to petroleum-based fuels. But he said they represent "mid-term to long-term" solutions and don't negate a short-term need for fossil fuels.

'Vancouver was ready'

Environmental activists say the planet doesn't have time for mid- to long-term solutions to climate change. They're calling for action now. That means pushing back against fossil fuel exports. Many say the stakes couldn't be higher.

The battle has put Vancouver directly in the spotlight. Much of the noise has come from outside forces. But so far, the effort has found traction in a city not perceived to be as environmentally active as its neighbor to the south.

"I think it is an awakening that has found Vancouver," said Trip Jennings, a volunteer organizer with advocacy group Portland Rising Tide. "But it seems to me that Vancouver was ready for it."

Last December, a public hearing on one of the proposed coal terminals drew 850 people to Clark College. In July, McKibben, the environmental activist, spoke to about 400 people at Clark College. And less than two weeks later, an estimated 700 demonstrators lined the Interstate 5 Bridge and the Columbia River in a symbolic but dramatic statement against fossil fuels.

As he toured the Columbia River in July, McKibben described how important Vancouver has become in the fight against climate change. Everybody in Portland can ride their bikes as much as they want, he said as his boat plied the river, but it won't make a "whit's worth of a difference" to the atmosphere if projects like the Keystone tar-sands pipeline in Canada or the Tesoro-Savage oil-handling facility are allowed.

His views are shared by Jennings and other advocates who see theirs as a grass-roots movement. They know they're up against energy companies wielding considerable political influence. They see strength in numbers, using bodies and voices as their strongest assets.

Backers of oil and coal facilities tout their economic value as developers promise thousands of new jobs in the region. But opponents hope to influence public opinion -- and the review process -- by highlighting the environmental risks of investing more in fossil fuels.

"Our goal is to create a political climate where it's politically not feasible to permit new fossil fuel infrastructure," Jennings said. "It means creating popular pressure."

Advocates scored a victory earlier this summer when local, state and federal officials announced that a proposed coal terminal near Bellingham will be subject to a broad two-year review process including an evaluation of greenhouse gas emissions. The review's scope will reach as far as the coal's end destination, considering impacts well beyond Washington's waters.

The decision came after thousands of advocates packed a series of meetings across the state, including in Vancouver. The proposed Millennium coal facility will be the focus of similar meetings this fall, and officials are gearing up for another round of huge crowds.

Miller, Millennium's CEO, doesn't see the sweeping review that the proposed Gateway Pacific Terminal near Bellingham will undergo as a bad omen for his project.

"Millennium is a separate project with separate circumstances," he said. Miller added: "We want to see the process move along. We're just keen to keep it moving."

That's exactly what opponents aim to prevent. And they may have an incentive to slow things down: Falling prices, slowing demand and other factors have led some analysts to suggest that the global market for coal might be cooling. Financial giant Deutsche Bank reportedly said earlier this year that the coal market could remain oversupplied for the rest of this decade.

In other words, coal's fate in the Northwest may not be decided by a permitting agency. Environmental activists also see hope in broader energy trends.

"Delay is kind of a victory," said Steinke, the Vancouver advocate. "The more we delay it, the less they'll need it."

Long fight ahead

In all of the protests and meetings and speeches during the past year, there's been a clear message: New coal and oil exports won't pass through the Northwest without a fight. But is it a fight opponents can win?

After all, establishment business and government leaders who have access to capital, political influence and expertise in navigating the permitting processes are backing plans to build new oil and coal facilities. In Clark County, for example, the Vancouver-based Columbia River Economic Development Council, which has promoted jobs and recruited businesses since 1982, supports the Tesoro-Savage proposal. And Paul Montague, executive director of the economic development organization Identity Clark County, testified to port commissioners that the oil terminal project is in line with the port's mission of generating jobs and other economic benefits for the community.

Put the question to local activists of whether they can win, and you'll get varying answers. Jennings believes his side will prevail, and that anything less than victory would be "game over" for the climate. Steinke is less confident. He said he's watched some people leave environmental activism, seeing it as a lost cause.

In Clark County, the effects of climate change have already begun, according to a 2011 report by the county's Public Health department. Overall temperatures have climbed in recent decades, and will likely continue on that path, according to the report. Extreme heat events are on the rise, the report said, and snowpack has declined.

The county's report described climate change as a "public health emergency that requires immediate action."

Vancouver resident and oil terminal opponent Michael Piper knows this much: Whatever the outcome, the fossil fuel controversy has raised the profile of the issue locally and brought new voices into the fray.

"It's waking up the younger, more active environmental folks in Vancouver," said Piper, 62. "It's nice to see a lot of young people now getting involved locally and paying attention."

A new local chapter of the Rising Tide organization is in the early stages of forming. It's unclear what its role will be, but Vancouver Rising Tide plans to make its presence known, said Kathy Lane, among those involved in the budding group.

The debate over fossil fuels is far from over. Public meetings on the Millennium terminal will put the issue right back in the forefront this fall. Reviews of that and other projects could last years.

Whether activists can prove Millennium CEO Ken Miller wrong remains to be seen. Whatever the outcome, the fight shaping up here is likely to reverberate far beyond Clark County. But many in Vancouver have embraced their city's new role as a key battlefield.

"This is on our watch," Steinke said. "It's happening right in our town."

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

Eric Florip: 360-735-4541; http://twitter.com/col_enviro; eric.florip@columbian.com