Wash. Port Releases New Lease Details For Oil-by-Rail Terminal

File photo of proposed site for an oil-by-rail terminal in Vancouver, Washington. | credit: Port of Vancouver USA

 

The Columbian

The Port of Vancouver on Wednesday released an updated version of its lease for the Northwest’s largest oil-by-rail transfer terminal, featuring fewer censored details but maintaining redactions of key issues the port considers sensitive.

The port released the updated version of its lease (429 pages in electronic format) with Tesoro Corp. and Savage Companies in response to multiple requests made in April by various parties, including the Columbian and The Oregonian newspapers, Theresa Wagner, the port’s communications manager, said Wednesday.

In the original version of the lease, the port had kept secret a total of 22 pieces of information. In the updated rendition, the port revealed 11 of those 22 pieces of information, Wagner said.

One revelation: The port is allowed to terminate the lease if Tesoro and Savage fail to launch construction within four months after both parties are presumed to have fulfilled certain other contractual obligations.

Previously, the port had censored the companies’ construction timeline.

Still kept a secret, however, are the number of months — since the effective date of the lease — the port and companies have to cancel the lease early if either party fails to meet their contractual obligations.

Exactly how those obligations, known as “conditions precedent,” work isn’t entirely clear. An obvious allowed reason for cancelling the deal is if Tesoro and Savage fail to obtain permits from state regulators.

The companies submitted their permit application to the state Energy Facility Site Evaluation Council on Aug. 29, seeking to handle as much as 380,000 barrels of oil per day for eventual conversion into transportation fuel. Washington Gov. Jay Inslee has the final say over the project.

Another disclosure the port made Wednesday: If Tesoro and Savage move a certain average volume of oil per day for 30 months after they start making rent payments to the port, then the companies get to keep exclusive rights to run an oil terminal at the port.

The port, under that scenario, wouldn’t be able to lease property to a new tenant who also wants to handle crude oil.

Previously, the port had censored how long the companies would have to maintain certain oil volumes to keep their exclusivity rights.

However, the oil volumes — and the date on which the companies start paying rent to the port — are still unknown, because the port kept them redacted in the updated version of its lease.

The port also maintained redactions of the amounts of wharf and dockage fees it will charge Tesoro and Savage. Those unknown fees are in addition to lease revenue that’s already known: The agreement involves 42 acres and is worth at least $45 million to the port over an initial 10 years.

The port is maintaining certain redactions under the Uniform Trade Secrets Act, saying that if certain pieces of information were made public, it would harm the port in various ways, including damaging its competitiveness and its ability to negotiate

Wagner said the port chose to reveal certain pieces of information because they’ve either become known from the Tesoro-Savage permit application or by way of public presentations given by the companies.

However, a Vancouver city attorney has questioned the port’s redactions. In a Feb. 18 email to the port, two weeks after he’d received and reviewed the lease, Bronson Potter, chief assistant city attorney, wrote that it’s “doubtful that any of the information redacted would qualify as being a ‘trade secret.’?”

The port’s lease also gives Tesoro and Savage first rights on leasing additional property to expand if the average amount of oil moved by the first facility exceeds certain barrels-per-day targets. Those targets remain unknown, because the port kept them secret in the updated version of its lease.

Tesoro and Savage would have to seek another round of permits to expand or build another facility.

Washington Congresswoman Airs Oil Terminal Concerns

Sen. Maria Cantwell, D-Wash., visits with the public after she held a discussion about raising capital for small business at Vancouver City Hall on Wednesday. | credit: Zachary Kaufman/The Columbian | rollover image for more

Sen. Maria Cantwell, D-Wash., visits with the public after she held a discussion about raising capital for small business at Vancouver City Hall on Wednesday. | credit: Zachary Kaufman/The Columbian | rollover image for more

 

April 17, 2014 | The Columbian

Gov. Jay Inslee, who will have the ultimate say over the construction of what would be the Northwest’s largest oil-by-rail transfer terminal in Vancouver, hasn’t taken a stand on the project. But members of the state’s congressional delegation are weighing in.

U.S. Sen. Maria Cantwell, D-Wash., was in Vancouver on Tuesday and stopped to visit with The Columbian’s editorial board.

Cantwell was asked if she were a Vancouver resident, would she support building the oil-handling facility?

“It wouldn’t be something I would be promoting,” she said.

She said safety is one of her foremost concerns. In a letter to the Senate Appropriations Committee earlier this month, Cantwell, along with other senators, called for more federal dollars going toward addressing safety issues related to transporting crude oil by rail.

“We’re certainly willing to introduce legislation to put requirements on rail car safety because we don’t think it exists now and we’re not waiting for a voluntary system. We’re not waiting for these guys to get their act together,” Cantwell said. “We’re going to push this year.”

Earlier this week, BSNF Railway officials told Vancouver city councilors they would spend millions to prepare first responders in case of an oil spill. City officials have expressed concerns over ensuring the oil travels safely on the rail line, which runs through downtown and by the proposed waterfront development on the old Boise Cascade property.

Although city officials don’t have a say over the $110 million project proposed by Tesoro Corp. and Savage Companies, they could join other cities, such as Seattle and Bellingham, that have called for a moratorium on new oil-transport facilities until safety concerns, ranging from oil spills to explosions, are addressed.

“This industry has grown far greater than our capacity to deal with it and we need to slow down and get this right,” Cantwell said.

The proposed Tesoro-Savage oil terminal could handle as much as 380,000 barrels of crude per day. The facility would act as a transfer point for oil, arriving by rail to the Port of Vancouver and leaving by water.

Cantwell said she recently pressed the U.S. Coast Guard for details on any safety plans in place for an oil spill.

“So we did get the comment on the record at the hearing that, yeah, we don’t really have a plan … We were glad we were able to clarify that point because we want people to understand there is no solution there,” she said.

Cantwell said she wants to hear about “what people here say about the situation.”

“I get the sense that Vancouver is painting a different picture of where they want their economy to go long-term,” she said.

Sen. Patty Murray, D-Wash., the chair of the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, recently held a hearing to question officials from the Obama administration and city of Seattle about the safety of rail transport of crude oil.

U.S. Rep. Jaime Herrera Beutler, R-Camas, said Wednesday she’s still asking a lot of questions about safety and environmental impacts.

But in the last three years, she’s said, she has heard a lot of talk about wanting more trains, moving more commodities.

“If these folks can demonstrate they will be good community partners and meet environmental hurdles, then we should talk about it,” she said.

The governor is waiting to receive a recommendation from the state’s Energy Facility Site Evaluation Council before making a decision.

Follow reporter Lauren Dake on Twitter: @col_politics.