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Settlement Reveals Details of Vancouver Oil Terminal Deal

August 7, 2015

A largely unredacted lease between the Port of Vancouver, Washington and companies looking to build the largest oil-by-rail terminal in the country has been released as the result of a legal settlement.

The proposal, called the Vancouver Energy Project, is a joint-venture backed by oil company Tesoro and logistics company Savage Industries.

The lease, turned over Wednesday, contains only three redactions, which cover proprietary information about pricing between the Port of Vancouver and Tesoro-Savage.

In May, a Clark County-based environmental group sued the port over a 2014 public records request for an unredacted version of the lease.

“It means the public gets access to almost everything in the lease of what is proposed to be the country’s largest oil terminal,” said John Karpinski, the litigation coordinator for the Clark County Natural Resources Council.

According Karpinski’s read of the lease, proponents have 36 months from the day the lease went into effect – or until August 2016 – to complete the permitting process for the proposed oil terminal.

“If all the permitting isn’t done by that time, both the port and Tesoro-Savage — now Vancouver Energy — have the right to walk away with no penalty,” Karpinski said.

Vancouver Energy spokesperson Jennifer Minx said the company hopes the state’s review of the project is done in a “timely fashion.”

“We’d rather not speculate about (what) might happen if that’s not the case,” she wrote in an email Thursday.

Minx also said there’s currently no penalty should the port or Vancouver Energy decide to back out of the current lease before the August 2016 date.

The project is currently being reviewed by Washington state’s Energy Facility Sighting Evaluation Council. The U.S. Army Corps of Engineers is also reviewing a portion of the project.

If built, the project could move 360,000 barrels of crude oil a day, coming by trains from the Bakken region of North Dakota and Montana. From there, the oil would be loaded onto ships at the Port of Vancouver and sent to refineries along the West Coast.

A newly revealed clause in the unredacted lease shows that Vancouver Energy has first right of refusal, should the port decide to expand its oil terminal operations.

“If the port expresses interest in developing another crude-by-rail facility at the port, and if Vancouver Energy has achieved an average throughput of 400,000 barrels per day, then Vancouver Energy would have the first right of refusal to work with the port to develop a second terminal,” Minx said in an interview. “That being said, we don’t have plans to develop a second terminal.”

Minx stressed the terminal is being designed and permitted to handle an average of 360,000 barrels of oil per day – not 400,000 barrels.

But Karpinski said he’s seen companies start small with intentions to expand.

“Once the camel's nose gets in the tent, it’s awfully hard to fight an expansion of these facilities, so we’re concerned,” he said. “If it hits 400,000 (barrels of oil) a day, they get to build another oil terminal.”

Port of Vancouver spokesperson Abbi Russell said — like with other businesses operating at the port — the lease with Vancouver Energy allows for growth.

“If the business grows and they need to expand, they can,” she said. “That’s an option that would be in the lease.”

Russell said the port doesn’t have plans right now to expand the size of the oil terminal.

As part of the settlement, the Port of Vancouver also paid $45,000 to the Clark County Natural Resources Council.

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Near a dock at the Port of Vancouver where crude from the proposed oil terminal would be loaded onto ships.

Conrad Wilson

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