July 23 (Bloomberg) -- Tesoro Corp.’s proposal to build a 120,000-barrel-a-day crude-by-rail complex at the Port of Vancouver in Washington received approval from the port’s board of commissioners today.
The board approved the ground lease for the project. Tesoro is partnering with Savage Cos. to build a station there, 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’s proposal to unload as much as 70,000 barrels of oil a day from rail cars at its 170,000-barrel-a-day Benicia refinery in Northern California was delayed until August by city regulators to allow more time for public comment.
The accident in Quebec probably won’t significantly affect crude-by-rail activity, Bill Klesse, Valero Energy Corp.’s chief executive officer, said in a conference call with analysts today. “Railing crude oil, railing ethanol, railing distillers’ grain, railing corn, railing asphalt, propanes, they are all here. They are part of the distribution system.”
Savage would oversee and operate the Tesoro rail complex in Vancouver, 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. The company planned to apply to the state Energy Facility Siting Evaluation Council for site certification, according to minutes of the council’s May 21 meeting.
“We’re confident we can deliver a facility that’s safe and environmentally sound,” Tina Barbee, a Tesoro spokeswoman at the company’s headquarters in San Antonio, said by e-mail today. “We look forward to engaging with the public” through the siting council’s process.
Tesoro is already shipping crude by rail to its 125,000-barrel-a-day Anacortes refinery in Washington from North Dakota’s Bakken formation. PBF Energy Inc., Philadelphia Energy Solutions, Phillips 66, BP Plc and Chevron Corp. are also among the refiners that have set up rail offloading stations at their plants in North America to reach cheaper oil produced in Canada and the U.S. Midcontinent.
California, the world’s ninth-largest economy, shipped more oil via rail than ever in February from North Dakota’s Bakken formation, backing out imports from overseas, data compiled by the state Energy Commission show.
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