Tesoro acquiring safer rail cars for Vancouver terminal

By Aaron Corvin, Columbian port & economy reporter

Published:

Updated: February 6, 2014, 6:36 PM

 

Tesoro Corp. said Thursday it has begun replacing older cars in its oil rail car fleet with safer, post-October 2011 cars. The company said it is committed to have its full fleet replaced by the middle of this year, before construction of its proposed oil-by-rail terminal at the Port of Vancouver.

Tesoro’s announcement comes after several recent oil train derailments and explosions, including the July 6 disaster in Lac-Megantic, Quebec, in which 47 people were killed and part of the town was leveled. The calamities have prompted government investigations and raised public concerns about the safety of hauling crude by rail through communities.

Keith Casey, senior vice president of strategy and business development for Tesoro, said Thursday that the company focuses on using the best available technology and had plans to replace the older cars in its fleet. The recent oil train incidents have “raised concerns about the safety of these containers,” he said. “What we chose to do is just accelerate that replacement of those cars.”

In an email to The Columbian, Theresa Wagner, communications manager for the Port of Vancouver, said the port encouraged Tesoro to take the actions the company announced Thursday.

“This is another step in an ongoing process aimed at making the transport and handling of crude oil safer,” she said. “The port’s top priority has always been safety, and we believe this decision is a critical step in that direction.”

Under the proposal by Tesoro and Utah-based Savage Companies, oil would be hauled to the Port of Vancouver by train from the Bakken shale formation in North Dakota, where crude is extracted by hydraulic fracturing. It would then be transferred to ships headed out on the Columbia River to U.S. refineries. Opponents of the oil terminal questioned Tesoro’s announcement, saying it doesn’t eliminate oil train safety problems or other concerns.

“It’s like putting lipstick on a pig,” said Brett VandenHeuvel, executive director of Columbia Riverkeeper.

VandenHeuvel said the Tesoro-Savage proposal “does not fit in a populated area like Vancouver,” noting American and Canadian transportation authorities have recommended rerouting oil-bearing trains away from populated areas.

“Of course, using modern cars is necessary,” he said, “but it doesn’t solve the safety problems, and it doesn’t solve the threats of supertankers traveling down the Columbia River, the air quality impacts on Vancouver neighborhoods, as well as” the impacts of increased train traffic.

Voluntary action

In a news release Thursday, Tesoro said its rail car fleet will consist entirely of the newer DOT-111 design rail cars — equipped with reinforced shields and relief devices — by mid-2014.

“We’re proactively making these commitments today, before expected changes in future federal regulations, because we believe it’s the right thing to do for all of our stakeholders,” Casey said in a news release.

VandenHeuvel said Tesoro’s announcement is a voluntary action and does not take into account that federal lawmakers may impose even stricter requirements.

“We expect that the federal recommendations will be much more protective than these voluntary ones,” he said. “Crude oil transport is dramatically increasing right now, and we’ve seen how dangerous it is,” VandenHeuvel added. “That’s a product of the explosiveness of the material, not simply the type of (train) cars.”

In a phone interview Thursday, Casey said if new, stricter federal requirements are imposed then Tesoro will meet them.

When Tesoro opened its rail-unloading facility at its refinery in Anacortes, Casey said, the company chose “to order new cars that met the new standards,” instead of using “the available DOT-111s.”

The older cars “are 10 percent of our fleet,” Casey said, and all of those will be replaced with newer ones, including those that would carry crude on BNSF Railway tracks to the Port of Vancouver.

Because Tesoro would initially provide much of the oil that would arrive at the proposed port facility, many of the crude deliveries would be owned by Tesoro and would arrive in Tesoro rail cars, the Texas-based refiner and marketer of petroleum products said in its news release.

But other companies, not just Tesoro and Savage, would be able to use rail to ship oil to the Port of Vancouver. Casey said Tesoro will work with other potential customers and business partners to address rail car safety issues. Because there are a lot of variables involved, Casey said, “we’re not quite ready to say what that looks like yet.”

Tesoro and Savage want to build a $110 million oil-by-rail facility capable of handling as much as 380,000 barrels of crude per day for eventual conversion into transportation fuels. The companies submitted their oil terminal application on Aug. 29. An environmental-impact review of the companies’ application by the state Energy Facility Site Evaluation Council, or EFSEC, is underway. Gov. Jay Inslee has the final say over whether the oil terminal gets built.