Vancouver Energy’s oil-by-rail capacity would be tops in U.S., analysis shows
November 24, 2014, The Columbian
By any measure, the size of the proposed oil terminal at the Port of Vancouver is eye-catching.
The oil-by-rail facility would handle an average of 360,000 barrels of crude per day, or up to four oil trains daily. The terminal would dwarf anything currently operating in Washington.
In fact, at full capacity, the proposal known as Vancouver Energy would handle more oil by rail than any single facility in the United States, according to an analysis of crude-by-rail terminals by The Columbian.
“On paper, it’s the biggest facility of that type,” said Sandy Fielden, director of energy analytics for Texas-based consultant RBN Energy. “As far as I’m aware, there’s not an existing terminal that handles that type of capacity.”
There are dozens of facilities across the country that handle oil transported on rail cars. But it’s difficult to find a comprehensive list of those operations in one place. A domestic oil boom has dramatically altered the U.S. energy landscape in recent years as regulatory agencies scramble to keep up.
Vancouver Energy, a joint venture by Tesoro Corp. and Savage Companies, is among a spate of recent proposals hoping to capitalize on the emerging trend. Some are entirely new terminals; some are expansions of existing facilities.
Other sites may have more storage capacity than the Vancouver terminal. Others may process more total oil — a refinery, for example, could handle oil that arrives by pipeline and other means in addition to rail cars.
But Vancouver Energy, proposed as a transloading terminal that would transfer crude from trains to marine vessels on the Columbia River, appears to surpass all others in terms of oil arriving or leaving strictly by rail.
“It is definitely about the biggest terminal that’s been proposed,” Fielden said. “Whether or how quickly they’ll get up to that rate to me is questionable.”
The companies have said they don’t expect to move 360,000 barrels per day from day one. The Vancouver terminal will likely receive one to two trains daily at first, then build out to full capacity, according to Tesoro and Savage. An economic analysis commissioned by the companies earlier this year assumed the terminal would be fully operational two years after beginning construction.
The Vancouver terminal will be a commercial-scale facility capable of serving several customers, Tesoro spokeswoman Jennifer Minx said in an email. That’s in contrast to other facilities designed to serve fewer users, or just one, she said.
Opponents of the terminal have pointed to the risk of oil spills, derailments and other dangers posed by funneling such a huge amount of crude oil through Clark County and Vancouver. But Minx said that building one large facility, rather than several smaller terminals, allows for the concentration of emergency response equipment in the “unlikely” event of an incident. The project is also going through a rigorous review by the state Energy Facility Site Evaluation Council, she added.
“We’re confident we can operate the terminal safely and in an environmentally responsible manner regardless of its size,” Minx said.
Many of the country’s other oil-by-rail facilities are clustered in Texas and North Dakota, the two biggest producers of crude oil. Others are bunched near the Gulf Coast and the eastern U.S., where many refineries operate.
As the rise of oil by rail has played out in recent years, the energy equation has shifted across the country, said Mindi Farber-DeAnda, a team lead with the U.S. Energy Information Administration.
“It’s phenomenal how much has changed,” Farber-DeAnda said.
The Energy Information Administration tracks volumes of data related to various forms of energy and its movement. The agency has assembled a map of energy infrastructure in the U.S., including oil-by-rail terminals. But the map only includes locations, not sizes.
The Columbian’s analysis found plenty of other terminals that handle multiple oil trains per day, but none on par with the Vancouver proposal. Among the largest:
• An unloading facility in St. James, La., that handles 280,000 barrels of crude per day. Another terminal in the same city handles an additional 140,000 barrels per day.
• A Savage-operated train-loading facility in Trenton, N.D., that handles 175,000 barrels per day.
• A rail hub in Epping, N.D., that loads some 160,000 barrels per day.
• The Philadelphia Energy Solutions Refinery in Pennsylvania, which receives about 160,000 barrels of oil per day by rail, though the facility processes much more crude than that in total.
A barrel of oil is equal to 42 gallons.
As new proposals emerge, the Energy Information Administration continues to monitor and analyze new trends and data. That’s always an ongoing task, Farber-DeAnda said.
“For us, it’s important to be able to put together the puzzle pieces and put together a total picture,” she said. “Otherwise, we’re only telling part of the story.”
Only a handful of sites in Washington now receive crude oil by rail. But Vancouver Energy is far from the only proposal poised to add to that number. It’s not even the only one in Vancouver.
A proposal by NuStar Energy would convert part of its existing Vancouver operation to store crude oil. The plan would bring about one-third of a unit train to the site per day on average, according to the company. Other proposed terminals have popped up across the western half of the state.
Two to three loaded oil trains per day already roll through Clark County on the way to existing West Coast facilities. About 17 million barrels of crude moved through Washington by rail in 2013, according to a state report released last month. By 2015, the amount could balloon to more than 68 million barrels.
In 2011, that number was about zero.
“We didn’t have any oil trains in our state at all until 2012,” said Lisa Copeland, a state Department of Ecology spokeswoman.
One wild card is the long-standing U.S. ban on exporting crude oil to foreign markets. Last month’s report acknowledged the possibility of that ban ending in the not-so-distant future. Copeland said her department views that as a “real possibility.”
Minx, the Tesoro spokeswoman, said it’s premature to speculate on whether the crude export ban might be lifted, or the possible impact on West Coast markets. The companies have cited reduced dependence on foreign oil as a key selling point of the Vancouver terminal.
The sharp increase in oil trains in Washington has prompted the state to rethink its emergency response plans, Copeland said. That process continues, and some officials have acknowledged that the state is ill-prepared for a major oil-by-rail disaster.
A series of derailments and explosions have heightened worries since last year. Several were linked to Bakken crude oil from North Dakota, which accounts for much of the crude now moving through Washington. Multiple reports and analyses have suggested Bakken oil is more dangerous than other types of crude.
“It’s not just this new mode. It’s a new type of oil,” Copeland said. “It’s a more volatile oil than we’re used to dealing with. It takes new resources. It takes new training.”