Who are Tesoro and Savage?
Tesoro Corporation (NYSE: TSO), a Fortune 100 company, is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates seven refineries in the western United States with a combined capacity of over 895,000 barrels per day and ownership in a logistics business, which includes interest in Tesoro Logistics LP (NYSE: TLLP) and ownership of its general partner. Tesoro’s retail-marketing system includes over 2,400 retail stations under the ARCO®, Shell®, Exxon®, Mobil®, USA Gasoline™, Rebel™ and Tesoro® brands.
Savage is a privately held global leader in the creation and delivery of integrated services and systems designed to meet the unique challenges in each customer’s supply chain. With more than 3,000 team members in over 200 operating locations in North America and internationally, Savage supports a wide variety of customers in the production, manufacturing and distribution of energy resources and other essential commodities. The company offers capabilities that span rail, truck and marine transport, terminal and facility operation and design and related services.
What is the purpose of Vancouver Energy?
Vancouver Energy will serve a basic and important function: the safe transfer of North American crude oil from rail to ship. The terminal will enable the crude oil from the midcontinent region to be efficiently transported to West Coast refineries, where it will be converted into transportation fuels and other petroleum products for the United States.
What is the permitting process for Vancouver Energy?
Washington’s Energy Facility Site Evaluation Council (EFSEC) is conducting a rigorous, public permitting process for Vancouver Energy including several opportunities for public comment. Additionally, the U.S. Army Corps of Engineers is completing a concurrent assessment for the terminal’s in-water construction elements, including seismic upgrades to the existing dock that will be used at the terminal. You can read more about the EFSEC process here.
Are there seismic concerns with the project?
As we sit on the Cascadia fault line, earthquakes are a concern for everyday life. According to an engineer with Hayward Baker the project is designed to withstand a 9.0 magnitude earthquake. Additionally, R&M Engineering Consultants, which developed site plan for the terminal and reviewed seismic issues raised in the DEIS, testified during the adjudicative hearing that final design of the project will meet all applicable design codes and requirements.
How have you demonstrated your commitment to safety and to addressing the points raised in the review process thus far?
We have continually assessed our construction and operating plans to determine how we can improve our approach to strengthen our focus on safety, the community and the environment.
Most recently, Vancouver Energy announced that it is willing to accept a condition that initially will limit the volume of crude oil the terminal can handle, and will tie growth in throughput at the terminal to safety performance. During adjudication, Vancouver Energy also announced additional safety measures to support first responders. In addition, Vancouver Energy has voluntarily committed to implementing safety practices and procedures that exceed regulations. And, to further Vancouver Energy’s commitment to safety, the terminal will only accept rail cars that meet or exceed the federal regulations announced in May 2015.
What rail safety measures have been put in place?
BNSF Railway has invested $1.5 billion in infrastructure in Washington over the last nine years to meet demand and improve safety, and is planning more than $220 million in Washington infrastructure investments for 2016. Additionally, the Port of Vancouver USA has implemented several safety enhancements to ensure that the tracks at the Port are capable of transporting crude oil securely. Read more about our safety measures here.
What are the next steps now that the adjudicative hearing phase of the EFSEC permitting process has concluded?
During the hearings in Vancouver and Olympia, EFSEC was presented with evidence from both supporters and interveners of the proposed terminal, and is now tasked with making a recommendation to Governor Jay Inslee after careful deliberation.
EFSEC staff is also preparing a final environmental impact statement that will be reviewed by the Governor, who has final say in whether to approve the project. Read more about adjudication here.
Is Vancouver Energy a refinery?
No. Vancouver Energy is a distribution terminal and is very different from a refinery. Using a closed loop system, Vancouver Energy transfers crude oil from rail cars onto marine vessels for transport to refineries along the West Coast. Vancouver Energy does not process or refine the crude oil.
What kind of crude oil will the terminal accept?
The proposed terminal is designed to handle pipeline-quality North American crude oil, which we anticipate will come predominantly from the Bakken formation in North Dakota.
How many trains will Vancouver Energy bring through Clark County daily?
Vancouver Energy will accept an average of four trains per day at full capacity.
Additionally, if deemed necessary by EFSEC, Vancouver Energy is willing to accept a condition that limits throughput at the terminal and ties growth in throughput to safety performance. Pursuant to this condition, the terminal will receive an average of 180,000 barrels per day at start and increase to an average of 270 thousand barrels per day if Vancouver Energy conducts operations for 12 consecutive months without material public safety or environmental incident at the Facility, in rail transit to the Facility, or vessel transit from the Facility. Throughput will be allowed to increase to an average of 360,000 barrels per day after additional 12 consecutive months of operations without incident.
Why is Vancouver, Washington, the best location for the terminal?
Of all West Coast deepwater seaports, Vancouver has the most direct rail access to the Bakken formation. Direct access reduces transportation costs and enhances safety with fewer handoffs between rail operators.
Vancouver Energy capitalizes on local investments intended to generate economic growth and benefits in the region. These investments include the recently-completed $190 million project to improve and deepen the Columbia River shipping channel and the Port’s $250 million West Vancouver Freight Access project, both of which were designed to create jobs and generate economic benefit.
Will Vancouver Energy export oil overseas?
Our agreement with the Port of Vancouver limits the ability for Vancouver Energy customers to export oil. The purpose of the terminal is to facilitate the safe transportation of North American crude oil to U.S. West Coast refineries.
Is Tesoro-Savage planning to increase the size of Vancouver Energy or build another facility?
Vancouver Energy will not expand the terminal or build a refinery or additional distribution facility in Vancouver.
What kind of community support does Vancouver Energy have?
Our research shows Vancouver Energy has the support of the community because it will bring thousands of jobs to the area, stimulate local and state economies, and help reduce America’s reliance on foreign oil – all while operating with the utmost dedication to safety and the environment. Past polls conducted by DHM Research in 2014 and 2015 have found Clark County voters support the Vancouver Energy project. We believe Governor Jay Inslee will also recognize the benefits the project provides to the state of Washington.
The Washington Building and Construction Trades Council (WBCTC) announced its official endorsement of Vancouver Energy in July 2015. WBCTC, which is comprised of more than 70,000 members in communities across the state, believes the terminal will create local jobs and operate safely. Additionally, a broad and diverse group of businesses, labor organizations and Washington citizens have endorsed the project.
How was Vancouver Energy selected to submit a proposal at the Port of Vancouver?
The Port of Vancouver USA invested to increase rail access to the Port and drive economic development for Vancouver and the region. Tesoro and Savage were invited – along with others – to bid on building an oil terminal on Port property. The Port selected Vancouver Energy based on criteria including our years of operational experience, safety record and successful past partnerships.
Did the Port involve the public in its decision to pursue the Vancouver Energy project?
Before the Port of Vancouver USA Commissioners approved leasing the terminal site to Vancouver Energy, the Commissioners held five workshops over a 10-week period to hear from local and regional experts, as well as community members, on a wide variety of issues and concerns related to the transport and storage of crude oil and the operation of the terminal. Based on this input, the Commissioners voted unanimously to approve the terminal’s lease. This started the state-mandated review and public-permitting process by the Energy Facility Site Evaluation Council (EFSEC).
Do Port Commissioners have the authority to declare the lease null and void if they choose?
As long as both parties are in compliance with the terms of the lease and moving forward in good faith, it would be inappropriate and a poor precedent for the Port to break the lease. These leases are crafted to provide protection for the Port and the community in case certain conditions aren’t met by the company leasing the property. The current lease was amended in April 2016, which extends the terms through March 31, 2017.
Can crude oil trains be stopped from coming to Vancouver if the Vancouver Energy terminal is not permitted?
With existing oil refineries on the West Coast and California increasing their use of North American crude oil, rail traffic will come through Clark County regardless of Vancouver Energy. The trains will continue unloading at terminals up and down the West Coast whether or not rail traffic stops at the Port of Vancouver USA.
Can oil be safely transported through the community?
Yes. According to the Association of American Railroads (AAR), rail moves 99.997 percent of hazardous materials without incident. Vancouver Energy and its partners are actively engaged in the national effort to enhance crude-by-rail safety.
To further Vancouver Energy’s commitment to safety, the terminal will only accept rail cars that meet or exceed the federal regulations announced in May 2015. We stand firm in that commitment – we won’t accept legacy DOT 111s at the terminal. To read more about our rail car commitment, go here.
Finally, Vancouver Energy thinks the best way to prove the effectiveness of proposed mitigation and the safety of facility design is through demonstrated performance. Therefore, if deemed necessary by EFSEC, Vancouver Energy is willing to accept a condition that initially limits facility throughput by 50% of the proposed amount (from an average of 360 to an average of 180 thousand barrels per day) until the following performance measures are met:
- Facility throughput will be allowed to increase to an average of 270 thousand barrels per day if Vancouver Energy conducts operations for 12 consecutive months without material public safety or environmental incident at the Facility, in rail transit to the Facility, or vessel transit from the Facility.
- Facility throughput will be allowed to increase to an average of 360 thousand barrels per day after another 12 consecutive months of operations without material public safety or environmental incident at the Facility, in rail transit to the Facility, or vessel transit from the Facility.
What has been done to prepare first responders in local areas for spills?
Tesoro and BNSF Railway have worked with local first responders to provide training in conjunction with the U.S. Coast Guard, Washington Department of Ecology, Clean Rivers Co-op and the Marine Spill Response Corporation. We also committed to joint emergency response training with BNSF, Spokane, Vancouver, local tribes and communities within the Gorge.
During adjudication, Vancouver Energy announced additional safety measures to support first responders. More information on Tesoro-Savage and BNSF Railway’s efforts to prepare local first responders can be found here.
Is the Columbia River safe for tanker traffic?
Yes. The Columbia River is a federal marine highway designated for transportation of commerce that is already safely used to transport a variety of cargoes, including petroleum products, in and out of the region. Approximately $190 million was invested in deepening the Columbia River channel to ensure it could safely handle larger ships to and from the Port of Vancouver USA and deliver more cargo up and down the river.
Vancouver Energy has voluntarily committed to implementing marine safety practices and procedures that exceed current regulations. More information about marine safety can be found here.
How will the Columbia River be able to handle the additional ship calls that will be added due to this project?
There is open capacity on the river. Combined, the five shipping ports on the lower Columbia River – Astoria, Longview, Kalama, Vancouver and Portland – receive about 1,500 deep draft vessel calls per year. The peak was about 2,200 ships in 1999.
Will a surge in rail shipments of crude oil prevent or cause delays in shipments of grain and other commodities?
BNSF Railway's significant investment over the last several years, particularly in Washington, has expanded network capacity. BNSF reports that crude oil makes up only 5 percent of commodities shipped by rail and that crude oil shipments will not impact shipments of grain or other commodities.
Will the presence of Vancouver Energy displace the wind energy already coming in to the Port of Vancouver?
The lease with the Port of Vancouver USA is only for a portion of the loop track and will not impact any operations outside of the area, which include not affecting the Port’s ability to receive and store wind energy components.