Tesoro-Savage files papers to secure permit for Vancouver oil terminal

If approved, it would be the largest oil-handling operation in the Northwest

By Aaron Corvin, Columbian port & economy reporter

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Tesoro Savage application for Vancouver oil terminal

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Bakken site oil under scrutiny after wreck

In seeking a permit to build an oil terminal at the Port of Vancouver, Tesoro Corp. and Savage Companies want to haul oil by train from the Bakken site in North Dakota to Vancouver.

But the nature of the oil coming out of the Bakken is under examination, in light of the fiery wreck in Lac-Megantic, Quebec, involving a train carrying Bakken crude.

Canadian investigators have determined that the oil hauled on tank cars that exploded in Quebec was a more flammable liquid than its shippers indicated, according to a Thursday report in The Wall Street Journal. It’s a development that “heralds a further tightening of oversight of the booming trade in shipping oil by rail.”

When asked about Bakken oil volatility Thursday, Theresa Wagner, communications manager for the port, said safety remains the highest priority and that port, BNSF Railway and company officials are working together to address it.

Left unanswered are the “exact contents” of the Bakken crude that exploded in Quebec, according to the Journal report, and “whether correct labeling would have stopped” the disaster in Quebec, which “investigators say appears to have started when the brakes on the unattended train were released …”

The Tesoro-Savage permit application says the companies commit “to having every train attended” from the time they assume control of the train from BNSF Railway to when oversight is returned to BNSF and the train leaves the port.

— Aaron Corvin

The joint venture proposing to build the Northwest’s largest oil-handling operation has filed for a necessary permit, officially launching a yearlong regulatory journey to decide whether Vancouver will become home to a controversial project that promises jobs and tax revenues but that raises public safety and environmental concerns.

Tesoro Corp. and Savage Companies, hoping to build a terminal that would handle as much as 380,000 barrels of oil per day at the Port of Vancouver, submitted on Aug. 29 an 872-page “application for site certification” to the Washington state Energy Facility Site Evaluation Council.

The council, or EFSEC, will review the application for a year or more and eventually make a recommendation to Gov. Jay Inslee, a Democrat, who has the final say.

Port of Vancouver commissioners voted unanimously on July 23 to approve a lease with Tesoro and Savage. Public testimony, overwhelmingly opposed to the project, raised many concerns, including possible oil spills on the Columbia River, the safety of hauling oil by rail in light of the fiery oil train disaster in Canada, detrimental impacts on Vancouver’s waterfront redevelopment plans and the worsening of global climate change.

But in a letter accompanying the companies’ application to the council, Kelly Flint, senior vice president and general counsel for Savage Companies, said the $110 million project — designed for an anticipated life of 20 years — will be held to rigorous safety standards. The community stands to gain about 250 temporary construction jobs, 110 full-time jobs, filled mostly with local workers, and “significant” tax revenues for Vancouver and the state. The terminal will also boost U.S. energy independence, according to Flint.

“We are committed to educating the community and interested parties about our proposed project through the EFSEC process,” Flint wrote.

Stephen Posner, acting manager for EFSEC, said in a Sept. 4 letter that the council is “preparing for a public information meeting to be held in” the Vancouver area in late October.

Rail car safety in question

Tesoro and Savage first went public with their crude oil proposal on April 22. Under their plan, oil would be hauled to the port by train from the Bakken shale formation in North Dakota, where it is extracted by hydraulic fracturing. The oil would be stored at the port and then transferred to ships headed for U.S. refineries.

Attention to the companies’ plan intensified after July 6, when a train carrying Bakken crude derailed and exploded in Lac-Megantic, Quebec, killing 47 people, vaporizing a large swath of the downtown, and prompting investigations by Canadian and U.S. authorities.

The tank cars that carry the oil — known as DOT-111s, the same ones involved in the Quebec calamity — fell under renewed scrutiny for what federal officials had previously said were serious design flaws. Those flaws, officials said, mean DOT-111s can break open in an accident, leading to a chain reaction of oil spills and other destructive impacts.

In his letter to EFSEC, Flint said the oil terminal will use government-approved tank cars and that beginning in October 2011, all new oil-bearing rail tank cars “have included additional protective safety measures as compared to previous versions of these cars, including increased head and shell thickness, the use of normalized steel, incorporation of a half-inch thick head shield, and a more robust housing or rollover skid for protection of top fittings.”

In an email to The Columbian on Thursday, Theresa Wagner, the port’s communications manager, said an operations plan — which will require port approval before the companies may launch any oil-handling activities — will address tank-car and other safety issues.

“Our expectation is that they will use the most up-to-date and technologically advanced cars available,” Wagner said.

‘3,426 trains per year’

The companies’ permit application adds new information about train, ship and infrastructure impacts of the oil terminal, including:

• At full capacity, and counting the return trips of empty trains, the crude oil facility will result in “up to 12 trains per day and 3,426 trains per year,” with most trains arriving from the east on the BNSF Pasco-to-Vancouver line entering Washington near Spokane.

• The project will result in about 140 ship transits per year in 2016 (the first full year of operations) and up to 365 ships per year at full build-out. That would result in 730 ship transits to and from the facility per year.

• To support unit trains (made up of 120 cars), two new rail lines, each 7,700 feet in length, will be added to the port’s Terminal 5 rail network.

The permit application also outlines the project’s risks and potential harm to people and the environment, and how Tesoro and Savage would deal with them, including:

• “Two sources of explosions could potentially occur at the Facility,” including mechanical explosions due to overpressure conditions. To prevent this, storage tanks “will be operated at atmospheric pressure” and will be equipped with devices to “vent gases should an overpressure situation arise.”

• The project has the potential to harm fish and fish habitat, including the potential for “catastrophic accidents such as spills to surface waters.” Best management practices will “minimize the potential for leaks and spills and the extent of damage from any unavoidable leaks or spills,” according to the companies.

• Because the oil-handling operation would be “a new source of air pollutants” under clean air regulations, the project must obtain applicable air pollution permits before construction begins.

As to concerns about human-caused global warming, Tesoro and Savage say the crude oil project “has the potential to emit 136,000 metric tons of greenhouse gases annually — about 0.14 percent of statewide greenhouse gas emissions — which means “the incremental effect of the project on global climate change is insignificant.”

Columbia Riverkeeper, the nonprofit environmental group that opposes the oil terminal, disagrees. The group estimates the combustion of oil moved through the port would result in about 59.64 million metric tons of carbon dioxide emissions annually, or the equivalent greenhouse gas pollution of roughly 12 million cars.

‘Not in the public interest’

The Tesoro-Savage permit application also reveals the companies have met with numerous elected city, county and state government officials, including members of Gov. Inslee’s administration, a representative of Washington State University Vancouver, and area business and environmental groups.

Eric LaBrant, president of the Fruit Valley Neighborhood Association, met with company representatives in May. He said Thursday that he personally supports the proposed oil terminal, but he couldn’t speak on behalf of the neighborhood, which has not yet discussed the project

“Folks in Fruit Valley understand that it is an industrial area, so it’s not a question of if there’s going to be industry there, but a question of how we can peaceably exist,” he said. “A lot of times that means making sure issues like pollution and noise are managed properly.”

Kelly Parker, president and CEO of the Greater Vancouver Chamber of Commerce, met with company officials in April and July.

“Rather than make a definitive value judgment on whether (the project) is good or not good for the city of Vancouver, I think the (EFSEC) process is a vigorous investigation by which we can ask the questions and learn the answers,” Parker said Thursday. She said the process would help her 1,100-member group evaluate the project “as a community and as (a) chamber.”

Parker said she couldn’t predict for certain whether the chamber would support the oil terminal. Still, she said, it’s “not usually the chamber’s nature to say, ‘No, we don’t want new jobs.’”

In a phone interview Thursday, Brett VandenHeuvel, executive director of Columbia Riverkeeper, said his group plans to organize its members and others in the community to “make the case” that the proposed oil terminal is “not in the public interest.”

He added: “We’re hopeful that EFSEC will take a hard look at the impacts of oil export.”

Columbian staff writers Cami Joner and Eric Florip contributed to this story

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