Tesoro Rail Project in Washington Gets Approval From Port Board

Tesoro Corp. (TSO)’s proposal to build a 120,000-barrel-a-day crude-by-rail complex at the Port of Vancouver in Washington received approval by the port’s board of commissioners today.

The board decided during a meeting in Vancouver to approve the ground lease for the project. Tesoro is partnering with Savage Cos. to build a station at the port, on the Columbia River north of Portland, Oregon, that would unload oil from rail cars and put it on vessels for delivery to markets along the Pacific Coast.

Tesoro’s proposal comes amid increased scrutiny over crude-by-rail projects after a Montreal, Maine & Atlantic train hauling oil rolled from its parking spot on July 6 and crashed in Lac-Megantic, Quebec, incinerating 30 buildings and killing at least 47 people. A surge in North American oil production and a lack of pipeline capacity boosted the amount of crude moved by rail to record levels last year, according to the Association of American Railroads.

A decision on Valero Energy Corp. (VLO)’s proposal to unload as much as 70,000 barrels of oil a day from rail cars at its Benicia refinery in Northern California was delayed by city regulators until August to allow more time for public comment.

Tesoro had said its project in Washington would require a land-lease agreement with the port and proposed an initial lease term of 10 years. Savage would oversee and operate the complex, which is expected to be operational in 2014.

The station would be able to handle an initial volume of 120,000 barrels a day with the potential to expand to 280,000, Tesoro said in April.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Bill Banker at bbanker@bloomberg.net

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