Vancouver Energy said Friday it plans to begin operations at its proposed Port of Vancouver crude oil terminal at half capacity, due to public safety concerns.
“We heard the concerns about safety and environmental protection raised through the Energy Facility Site Evaluation Council process. We are proposing being judged by our actual performance,” Vancouver Energy General Manager Jared Larrabee announced in a news release. “We offered to begin operations at 50 percent of the optimal throughput, and significantly, only allowing this throughput to increase after demonstrating the facility operates safely.”
Vancouver Energy — a joint venture of Tesoro Corp. and Savage Cos. — wants to build the largest oil transfer terminal in the nation, capable of handling up to 360,000 barrels per day.
The project was evaluated at quasi-judicial hearings held by the evaluation council in June and July. The council has yet to release its recommendation.
On Thursday, Vancouver Energy submitted an updated application. Anna Gill, a spokeswoman for the evaluation council, said it should be available on the evaluation council’s website by Monday.
According to the news release, the company made “a number of substantial commitments, above and beyond regulatory requirements, to help enhance safety and improve the performance of the crude-by-rail terminal.”
Some of those measures include having a marine tug escort all loaded vessels, transporting oil in rail cars that meet or exceed certain federal standards and commitments to supply oil to Washington refiners.
Dan Serres, conservation director of Columbia Riverkeeper, said he hasn’t seen Vancouver Energy’s updated application, but cutting the size of the project — even by half — doesn’t address its fundamental problem.
“The bottom line is, there’s a reason why (Vancouver Energy) has earned the opposition of Vancouver, Spokane and Columbia River Treaty Tribes … oil trains blow up,” he said.
Serres also questioned the sincerity of the announcement, given the current low price of oil.
“Tesoro is trying to claim credit for a weak oil market,” he said. “To begin with, it was hard to believe they’d be able to move 360,000 barrels a day. Now they’re trying to say they’re (reducing volume) out of safety.”
Vancouver Energy’s announcement comes the day after Shell announced it was suspending plans to build a crude-by-rail terminal to supply its refinery in Anacortes, north of Seattle.
“When we look at current crude oil supplies, prices and markets globally, and the cost of the project, it just doesn’t make economic sense to move forward at this time,” Shirley Yap, general manager of Shell’s refinery, said in a news release.
Larrabee said Vancouver Energy’s decision has nothing to do with prices and everything to do with public trust.
“We fully intend and believe the market is there for this facility to be at full capacity. This is our commitment. We’re willing to move to those higher volumes based on our performance and how our rail and marine partners perform,” he said.
Stair-step plan
Vancouver Energy’s business plan calls for the terminal to receive oil by railroad and store it to be loaded onto ocean-going vessels that would transit the Columbia River.
The company still plans to build the facility to handle a maximum output of 360,000 barrels per day, but would handle half that amount for the first year. After 12 consecutive months without environmental or public safety incidents, throughput would increase to 270,000 gallons per day. Finally, after another 12 consecutive safe months, the terminal would move full capacity.
As a consequence of lower output, fewer people would be hired initially, but the company still expects to employ hundreds of people and generate billions in economic value.
How greatly the terminal will benefit Washington residents was a point of contention through the adjudication. Several opponents claimed Washington, specifically Vancouver residents, will bear the risks and reap few benefits.
“This project simply doesn’t pencil out, and it’s galling for Tesoro/Savage to be claiming that its lack of customers represents a commitment to safety,” said Earthjustice Attorney Kristen Boyles, who represented some of the opponents during the adjudication process. “Tesoro is desperately making up reasons why it should build North America’s largest oil-by-rail terminal after five weeks of evidence cast doubt on the whole thing.”
In its revised application, Vancouver Energy committed to supply Washington refiners. However, aside from a 60,000-barrels-per-day commitment by Tesoro, Vancouver Energy doesn’t have any contracts to supply any refiners with oil.
Larrabee said other negotiations will come after the permitting process is finished.
“This has always been a long-term facility. It’s not based on what’s happening today,” he said. “Alaskan North Slope oil production is still in decline … there’s still a need for something like this. We’re building a facility that meets the needs of the entire West Coast, not any one customer.”
The site evaluation council is expected to make a recommendation on the project by the end of this year or in early 2017, which would be more than three and a half years since the terminal was proposed. The governor will weigh the council’s recommendation as he makes the final decision on the terminal.
