Port of Vancouver extends oil terminal lease

Commissioners make counteroffer to Vancouver Energy proposal

By Brooks Johnson, Columbian Business Reporter

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You can have a little more time to get your permits, the Port of Vancouver’s three commissioners told the developer of what would be the nation’s largest oil terminal, but not too much time.

The commissioners unanimously voted late Friday afternoon to extend Vancouver Energy’s permitting and early termination deadline at least eight months. That’s much less than the two years sought by the company, but a lot longer than terminal opponents, who have called for an outright end to the lease, had hoped for.

“I believe Vancouver Energy deserves to go through the process,”  said Commissioner Brian Wolfe, who proposed the lease changes that eventually got approved.

It took nearly five hours of deliberation and different proposals to reach consensus on the changes, which have buoyed the prospects of the rail-to-marine terminal reaching the end of the Energy Facility Site Evaluation Council process. Instead of an Aug. 1 permitting deadline — when costs for Vancouver Energy would begin to ramp up significantly — the company now has until March 31 to get through the process that gives the governor final say over the project’s approval following the council’s recommendation.

“We’ll know, hopefully by the end of this year, what that recommendation will be,” Wolfe said.

The project has been going through the motions for nearly three years, and many have urged the port to take advantage of the penalty-free early-termination clause it can now take advantage of.

“I don’t think it’s going to change things for the better to keep this on life support,” said Commissioner Eric LaBrant, who opposed the company’s proposed lease amendment.

After he was able to secure a condition in the lease that the oil would not be exported to foreign countries, LaBrant voted for the terminal’s life support, however. The legality of such terms was uncertain, port staff said.

The lease amendment also: increases Vancouver Energy’s monthly payments from $50,000 to $100,000 starting in May; requires only “pipeline-grade” oil be used; gives the company 30 months to get through legal challenges following approval; and brings the contract up for review every three months after March 31. The lease can still be terminated without penalty if state approval does not come through on time.

It’s likely the commissioners will need to vote on the lease again between now and March 31. That’s if Vancouver Energy, the joint venture of Tesoro Corp. and Savage Cos., accepts the port’s counteroffer to the lease amendment the company submitted last week.

“We’re pleased to have received a unanimous decision by the port commission, which affirms the value of the Vancouver Energy project and demonstrates their continued commitment to the project, and to allowing (the council’s) review to move forward,” Vancouver Energy said in a statement Friday evening, its only comment on the lease change. “We plan to review the language of the lease amendment.”

The commission’s effort to reach a consensus Friday followed a packed daylong public hearing on Tuesday about Vancouver Energy’s proposed contract amendment. The hearing attracted about 200 speakers, with a strong majority opposed to the project.

Friday’s meeting was also packed full of oil terminal opponents and some supporters, though no public testimony was taken. Instead, the commissioners got to take center stage and explain their positions on the project.

Commissioner Jerry Oliver had expressed strong support for the contract extension requested by Vancouver Energy and the project overall.

“The men and women of our state and country rely on a future that gives them the opportunity to work at an honest job, a productive job, to earn an honest salary,” Oliver said.

He said he didn’t believe in human-caused climate change and derided environmental critics, at one point comparing them to the Confederate soldiers in the U.S. Civil War.

“They were sincere like you, and like you, they were sincerely wrong,” Oliver admonished critics.

LaBrant, elected in November on an anti-oil-terminal platform, all but said the port should walk away from the project as it remains mired in permitting delays.

“We’re looking at potentially 4½ years of zero job creation,” he said. “Timelines in the lease was something the port and Tesoro-Savage had complete control over. Deadlines are part of the process.”

Wolfe, in an often-rambling statement that revealed his deeply mixed feelings about the project, proposed the surprise compromise. He was adamant that the project be allowed to run through the evaluation council process, even as he and other commissioners repeatedly called the process “broken.”

“In my mind, we have a lot of unanswered questions, and to pull the plug now just isn’t fair to our applicant,” Wolfe said.

He said the “facts, not opinions” will come out during five weeks of adjudication hearings this summer, the next step in the evaluation council process. That is expected to run from late June to the end of July and will see the 360,000-barrel-per-day terminal essentially put on trial, with witnesses and evidence presented to the council.

Adjudication wraps up right before the company’s original Aug. 1 permitting deadline, pushing a potential decision on the project to the end of the year or into 2017, hence the need for the lease amendment. The amendment saved Vancouver Energy from a ramping-up of costs on a project it currently receives no revenue from.

The company has also requested a processing extension from the evaluation council. The council is expected to vote on the request at its monthly meeting Tuesday in Olympia.

Gordon Oliver contributed to this report.