Tesoro reps: Oil terminal fits with Inslee’s goals

By Aaron Corvin, Columbian Port & Economy Reporter

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The Columbian's Editorial Board spoke Thursday, Dec. 11, with Dan Riley, left, vice president of government affairs for Tesoro Corp., a petroleum refiner, and Jared Larrabee, general manager of Vancouver Energy.

A representative of the joint venture to build the nation’s largest oil-by-rail terminal in Vancouver said Thursday that Washington Gov. Jay Inslee, who will decide the project, “has every reason to say yes” to it.

Inslee has publicly said he supports investments in infrastructure and that he wants jobs, said Dan Riley, vice president of government affairs for Tesoro Corp., a petroleum refiner. “I think (the oil terminal) fits into what he wants to accomplish,” he said.

Riley made those and other remarks during a wide-ranging interview with members of The Columbian’s editorial board about the proposal to receive an average of 360,000 barrels of crude per day at the Port of Vancouver. He was joined by Jared Larrabee, general manager of Vancouver Energy — the name of the joint venture between Tesoro and Savage Companies — and Jennifer Minx, a spokeswoman for Tesoro. Topics included everything from climate change and rail safety to the collapse in oil prices and whether or not the companies have a backup plan if Inslee rejects or significantly modifies their project.

In a phone interview Thursday, Jaime Smith, a spokeswoman for Inslee, said it’s true the governor’s top priority is jobs but that Inslee won’t comment specifically about the oil terminal. It’s important to first fully analyze both the potential economic and environmental impacts of the project, Smith said, which is what the Washington State Energy Facility Site Evaluation Council is currently doing.

“That’s why we have these review processes,” Smith said, “to have a full understanding.”

Eventually, the evaluation council will make a recommendation to Inslee, who would approve or deny the oil terminal, or send it back to the council for more work. The outcome may be appealed to the state Supreme Court.

‘Going to take time’

Riley said he believes opposition to the oil terminal is built on two major drivers: the push to reduce dependence on fossil fuels and concerns about the safety of moving crude by rail.

Although alternative energy and technological changes are part of the mix, Riley said that people and the economy remain dependent on fossil fuels.

Most climate scientists agree that the cause of the current global warming trend is human activity, including the burning of fossil fuels. Riley acknowledged that Inslee’s agenda also includes fighting climate change. But he said the oil terminal won’t increase carbon emissions on the West Coast. That’s in part because crude from the Bakken shale formation — a major source of oil for the proposed rail-and-river transfer operation — has a lower carbon intensity, Riley said.

However, the notion the terminal won’t increase carbon emissions runs counter to concerns raised by the Washington state Department of Health, for example. In comments the department submitted to the evaluation council, it says the “extraction, rail transport and proposed terminal operations will significantly increase greenhouse gas emissions responsible for predicted climate change impacts on public health.”

As to rail safety, Riley said several actions are underway to make improvements, including the use of more durable tank cars and “significant” investments by railroads in the system. “I think we can improve the rail system,” he said. He added, “It’s going to take time to prove to the public that it’s safe.”

He said the oil terminal will help reduce reliance on foreign oil imports, including on the West Coast. Washington state receives oil from Alaska, where production is in decline, Riley said. And the oil terminal, aimed at capitalizing on a surge in domestic crude production, would help reduce the state’s reliance on foreign imports.

‘Still very viable’

At one point, Riley was asked whether the companies would ship crude overseas if the current ban on exporting domestic crude is lifted. He said the joint venture’s interest is in loading the crude hauled to the port onto ships bound for West Coast refineries.

Riley said there’s nothing “written into the contract” — a reference to the companies’ lease with the port — that would prevent the companies from exporting to foreign markets if the export ban is lifted. However, he said, “the business case” rests with transporting oil to West Coast refineries.

Larrabee said the recent collapse in oil prices, while it may slow the pace of crude production, won’t have a negative impact on the proposed oil terminal. “The economics of this are still very viable,” he said.

Larrabee said the joint venture hasn’t discussed another location for the oil terminal in the event Gov. Inslee rejects its construction in Vancouver.

Given the port’s $275 million investment in rail infrastructure and its proximity to mid-continent crude, Larrabee said, “it’s the best place to do a project like this.”

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