Port staff: Don’t renegotiate oil terminal contract

Port of Vancouver public hearing set Tuesday at Gaiser Hall

By Brooks Johnson, Columbian Business Reporter

Published:

 

Highlights of Vancouver Energy’s request to port

Vancouver Energy’s proposal requests several changes to its lease with the Port of Vancouver, which port staff are asking commissioners to reject. The highlights are:

 Extending the permitting deadline from Aug. 1 this year to Aug. 1, 2018.

 Increasing the monthly fee paid to the port while the project is under review from $50,000 to $100,000 as of Aug. 1. (The fee would go much higher without the amendment.)

 Eliminating the opportunity for Vancouver Energy to operate a second oil-by-rail facility at the port.

 Providing Vancouver Energy 30 months to resolve any appeals of licenses, permits or approvals.

 Allowing the port to use the premises during the extended contingency period.

The full proposed lease amendment can be found at http://bit.ly/1SBp7kZ.

The Port of Vancouver delivered a major blow to the proposed rail-to-marine oil terminal when the port’s staff came out against a cost-saving contract renegotiation requested by Vancouver Energy.

The staff recommendation to deny the request, made public late Wednesday, increases the chance that the port’s three commissioners will vote to stick with a contract that ramps up the oil terminal’s costs this summer.

Vancouver Energy requested changes that would provide a two-year delay in a huge spike in rent set to kick in Aug. 1. The company said it made the request because the project is still grinding through the long state approval process.

“Staff’s recommendation to the board of commissioners is to decline this requested amendment but continue working in good faith with Vancouver Energy to pursue necessary approvals,” the port said in a release.

Port of Vancouver CEO Todd Coleman was not available for comment Wednesday, though he reportedly met individually with commissioners.

The amendment will be debated at a daylong April 12 public hearing at Gaiser Hall at Clark College and then discussed and likely voted on by the commission at an April 15 meeting.

Rejecting the amendment doesn’t spell doom for the terminal’s lease, unless commissioners decide to take up the larger lease issue at a later time. However, leaving the lease as-is could put pressure on Vancouver Energy to come up with a better deal for the port or even back out of the project.

The existing lease for the terminal, which would handle 360,000 barrels of crude oil per day bound for West Coast refineries, was unanimously approved in 2013.

The commission’s makeup has changed since then.

Commissioner Jerry Oliver said Wednesday that he remains in favor of the project. Commissioner Eric LaBrant, who was elected last fall on an anti-terminal platform, did not offer an opinion Wednesday. Commissioner Brian Wolfe did not return a call and email for comment. But in March, Wolfe told The Columbian he’s not sure how he’d vote on the lease if it came up again.

The lease called for Vancouver Energy to get “all necessary licenses, permits and approvals” for the terminal by Aug. 1, according to the lease. With the state permitting process dragging on through the summer, it will be impossible for the project to get Gov. Jay Inslee’s approval — if he signs off on the terminal — in time to meet that deadline.

The terms of the lease allow the port or Vancouver Energy to terminate the 10-year agreement early without “further cost or obligation” if the project isn’t approved and permitted within three years of the agreement — the Aug. 1 deadline.

Tesoro Corp. and Savage Cos., the joint venture behind Vancouver Energy, currently pay the port $50,000 per month in rent. Should the Aug. 1 deadline pass without action, the company’s payments will skyrocket, according to the lease. That’s because it was expected the terminal would be close to operating and generating revenue by then.

A Vancouver Energy spokeswoman said the permitting process through the state Energy Facility Site Evaluation Council “is designed by state statute as a one-year process, and it was never anticipated to take this long.”

“The Aug. 1 date included in the current lease isn’t a cancellation date; it’s a date that allows us to have a discussion regarding the lease, and we believe the time to have that discussion is now,” Tina Barbee said.

LaBrant said the focus of the hearing will be on the amendment requested by Tesoro and not the lease overall.

“My hope with the hearing is that the stakeholders and the public feel like they’ve been heard and taken seriously,” LaBrant said, “regardless of what the outcome is.”

Public hearing

Tuesday’s public hearing is scheduled to be held at Clark College’s Gaiser Hall, 1933 Fort Vancouver Way. The port’s regular meeting will start there at 9:30 a.m. before the hearing starts at the end of regular business. It could run as late as 9 p.m. Speakers will be chosen by lottery.

The public hearing comes with less than six days’ notice, and it’s unclear why the port is moving so quickly even though the current lease still has nearly four months remaining before the Aug. 1 deadline.

The 1 p.m. meeting on April 15 at the port’s offices, 3103 N.W. Lower River Road, will not include public comment.

LaBrant said he anticipated the commissioners would vote on the lease amendment that day. When asked if the full lease could come up for a vote, he said the amendment “is where the focus is right now.”

“I know there are a lot of folks that would love to be done with the process right away. But then we also have a lot of stakeholders who see it differently. We are staying focused on discussing the extension for now,” LaBrant said.

Oil terminal opponents who call the project unsafe and environmentally damaging have urged the commissioners to cancel the lease outright and walk away from the project.

“It’s hard to imagine — the facts are largely known about this — it’s hard to imagine why the port would choose to continue the project,” said Dan Serres, conservation director with Columbia Riverkeeper.

But the port has an interest in seeing the project get built, at the very least for the revenue it promises to bring in. The port largely relies on tenant income, taxes and credit to fund its projects, like the $275 million West Vancouver Freight Access project. If tenant revenue is flat or falling, the port has the ability to look to other sources, including borrowed money or a tax increase.