The former chairman of the state agency reviewing a proposal by Tesoro Corp. and Savage Companies to build the Northwest’s largest oil-by-rail terminal in Vancouver says a statement by Tesoro’s CEO to investors that his company expects to launch construction late this year or early in 2015 is unrealistic.
“The CEO of Tesoro does not understand the (state Energy Facility Site Evaluation Council) process, that much is clear, or he understands the EFSEC process and is putting on a happy face,” Jim Luce, chairman of EFSEC from 2001 until 2013, said Friday.
Luce opposes the oil terminal, which Tesoro and Savage want to build at the Port of Vancouver. He’s also a consultant to Columbia Waterfront LLC, which wants to conduct a $1.3 billion commercial/residential redevelopment of Vancouver’s waterfront. The waterfront backers view the oil terminal, proposed less than two miles west of the waterfront development, as a significant threat to their project.
Tesoro’s project, a partnership with Savage Companies, is already up to two months behind the two companies’ original schedule. Based on his experience serving on EFSEC, and for practical reasons associated with processing major energy-project proposals, Luce said, it will take much longer for Tesoro to reach a permit decision than even the company’s revised estimates suggest. Other experts agree. And at least one recent energy project shows it can take more than a few years to reach a final decision.
Luce’s remarks Friday followed those of Tesoro Chief Executive Officer Gregory Goff. During an earnings conference call Thursday, Goff said the EFSEC permitting process for the oil terminal, which began when the companies filed an application on Aug. 29, “is taking longer than we have originally expected,” according to a transcript of the conference call.
Goff also said the cost of building the oil terminal could run as high as $190 million — 72 percent higher than originally estimated.
As Reuters reported Thursday, the companies initially had expected to start up the oil terminal in late 2014 or early 2015. But Goff said the companies now expect to receive a permit and begin construction in that time frame.
The project is “somewhere between six to eight weeks behind schedule,” Goff said, while awaiting the state to come up with requirements for an environmental impact statement. “But we’re actually in a good position to respond fairly quickly when that comes out,” he said.
Goff said Tesoro expects to be receiving oil to the site by mid-2015, before the entire project is completed. The entire project should be completed a year after construction begins, he said.
In a phone interview Friday, Jared Larrabee, general manager in Vancouver for the proposed oil terminal for Savage Companies, said the revised timelines are “realistic” and that the companies are doing “everything we can to make sure the process is running as smoothly” as possible. That includes providing the state with as much information as needed to move the process forward, Larrabee said, and “fundamentally, to make sure safety is addressed along the way.”
Although state law says the Energy Facility Site Evaluation Council has one year to make its recommendation — and gives Washington’s governor another 60 days to accept, reject or send a proposal back to the council — the law also provides for extensions.
Amanda Maxwell, a spokeswoman for EFSEC, said Friday that such extensions are common when dealing with projects that are “quite complex, and depending on the level of public involvement, they can take a lot longer than that 12 months.”
Maxwell declined to comment on whether Tesoro’s updated timelines are realistic.
‘An expansive EIS’
However, Luce, the former EFSEC chairman, said the company’s revised expectations aren’t believable for several reasons.
Luce estimated it would take nine months to a year just for regulators to complete a draft environmental impact statement, which will “be an expansive EIS.” After that document is released, the public will have opportunities to comment on it.
Meanwhile, an adjudicative proceeding, not unlike that of a trial-court atmosphere, will allow proponents and opponents to argue over the proposed oil terminal before EFSEC.
Sometimes, Luce said, new issues that weren’t addressed in the original environmental impact statement come up during the adjudicative proceeding. Those new issues prompt the need to supplement the initial environmental-impact document, he said, which lengthens the process.
What’s more, Luce said, if the Tesoro-Savage project wins approval, opponents may appeal the decision to the state Supreme Court, stretching timelines even further.
Indeed, major energy projects can take more than a few years to obtain construction permits. The developer of a controversial wind farm in Skamania County first proposed the project in 2008. The wind farm was given a green light — in a scaled-back form — by EFSEC in 2011, then approved by then-Gov. Chris Gregoire in 2012.
Opponents appealed it. The state Supreme Court upheld the wind farm’s approval last summer. Even so, the project has languished.
During a Vancouver City Council hearing in February, Kirkland attorney Susan Drummond, hired as an adviser to help the city negotiate the complicated EFSEC process, cited the wind farm project as a reason not to expect a decision anytime soon.
And she described the Tesoro-Savage proposal as more complex than the wind farm, with trains running through multiple jurisdictions.
‘Not unusual’
Until Tesoro’s earnings conference call Thursday, the proposed oil transfer terminal carried an estimated price tag of $110 million. But Goff told investors costs could now run between $150 million and $190 million, and would be split between Tesoro and Savage.
Goff did not say why the cost had risen, and he did not say the costs or delay threatened the viability of the project.
Larrabee, the Savage Companies general manager, said Friday that as the project’s engineering and design work has gotten more detailed, the companies have determined the proposed oil terminal will cost “a little bit more than originally anticipated.”
In an email to The Columbian on Friday, Theresa Wagner, communications manager for the Port of Vancouver, said Tesoro’s revised permit expectations do not impact the port’s lease with the companies. “Changes in project timelines and cost are not unusual,” Wagner said. “We anticipate such changes and build flexibility into our leases. Standard practice.”
The port commission approved a lease in October with Tesoro-Savage. The agreement involves 42 acres and is worth at least $45 million to the port over an initial 10 years. The companies want to build an oil-by-rail facility capable of handling 380,000 barrels of crude per day for eventual conversion into transportation fuel.
