Coming soon: Oil trains. All the risk, fewer regulations
by Floyd McKay
Empty coal cars flank Bakken Oil tankers at the Port of Everett. Credit: Credit: Paul K. Anderson
The Pacific Northwest Energy Boom rolled into Vancouver, Wash., in a big way Tuesday, sparking more debate about how the region can handle demands from oil and coal companies for export terminals shipping to markets in the U.S. and Asia.
Port commissioners in Vancouver unanimously endorsed a huge oil terminal that would bring up to 360,000 barrels a day from the Bakken Oil Field in North Dakota, by rail, to the Columbia River port. That decision would add eight long unit, or mile-and-a-half-long trains daily to the already heavy traffic through the scenic Columbia River Gorge. Gorge protectors protested. (The extra rail traffic would include both full and empty return trains.)
American crude oil is prohibited from export except to Canada and pressure is already building on Congress to repeal the export ban. The vast Bakken Field is producing more oil than pipelines to American markets can handle. Trains are already running to at least two Pacific Northwest terminals. Neither is on the scale of the Vancouver terminal, which would be operated by Tesoro.
Energy-export schemes are literally piling up on the desks of area agencies, as companies rush to extract resources from sparsely populated North Dakota, Wyoming and Montana and find West Coast ports where agencies and the public will accept the cargo and the mile-and-a-half-long trains that deliver it.
If all the proposals now on the wish lists of the big coal and oil companies were to be approved, they would add about 60 unit trains a day to traffic in the Gorge. Twenty of them would be hauling oil. Sections of the Gorge have been identified by the State Department of Transportation as already near capacity. (You can see an extensive charting of the rail impacts by Sightline Institute here.)
The train traffic, including proposed coal-export terminals at Longview and Cherry Point near Bellingham, would make up 34 daily trains at capacity. Another big rail demand — a proposed bottled-water plant at Anacortes — would add as many as eight additional trains a day to the already stressed rail network.
“Unprecedented” is a word easily abused, but the region has never seen a boom like this. It threatens to overrun governmental agencies responsible for permits on many of the projects, not to mention the rail-corridor communities.
Already, county, state and federal agencies have spent nearly three years dealing with a proposal for the region’s largest coal-export terminal, Gateway Pacific near Bellingham. Thousands of citizens have testified at public hearings. Mountains of studies and applications await experts who will spend perhaps two years preparing an environmental impact report for decision-makers. A similar process life span is expected for the Millennium Bulk Terminals project at Longview. A much smaller export scheme, whioch would take Powder River Basin coal by rail to Oregon’s Port of Morrow and transfer it to Columbia River barges that would be unloaded downstream at St. Helens, also faces an uncertain future.
Oil exports from the Columbia River are already happening, from an unused ethanol plant near Clatskanie. Global Partners, a Massachusetts firm, is accepting a trainload Bakken crude every other day and loading it onto barges for West Coast refineries. The Longview Daily News reports about 50 workers at the site. The Vancouver oil terminal would employ about 120 workers.
North Dakota’s lucrative oil fields were opened up in the last decade thanks to hydraulic fracturing or “fracking,” a controversial technique that involves injecting a mix of water and sand into the oil seams to open them for extraction. Trains, a railroading journal, predicted two years ago that railroads would be among the winners in the “next Powder River Basin” rush, because pipelines simply wouldn't be able to handle the volume ready for extraction. Trains journal was right and BNSF, the railroad serving most of Washington, is the biggest winner. But to maximize its profits, it needs West Coast terminals that can handle oil as well as coal.
Under present law restricting sale of domestic crude oil to Asia, the Dakota crude will be shipped to existing oil refineries on the West Coast. Tesoro’s Anacortes refinery is already receiving some Bakken oil by rail, and BP’s big refinery at Cherry Point is ready to accept oil by rail. The three other refineries in the state’s northwest corner are also gearing up for Bakken crude. Some of the Bakken oil will replace crude from Alaska, where oil production is declining.
Public pressure from environmentalists, trackside communities and health and safety organizations has already battered Gateway Pacific and is expected to hit Millennium as well. Some of the oil terminals — the existing five refineries — face only limited public review. Others, such as the Vancouver proposal, will go all the way to Gov. Jay Inslee.
Washington’s Energy Facility Site Evaluation Council (EFSEC) is a unique and little-known agency charged with reviewing major projects in the energy field. Created in 1970 to provide “one-stop” permitting for large energy projects, it has in recent years involved itself in wind energy and natural-gas storage and pipelines. This will be its first venture into oil terminals. Coal-export terminals are covered under other laws.
Representatives of five state agencies sit on the Council, chaired by a public member appointed by the governor. The current chair is Jim Luce, an attorney who has served since 2001. The Council forwards recommendations to the governor, who ultimately decides if a permit will be issued; conditions can be attached.
EFSEC contracts with other agencies and private consultants in a process similar to the environmental impact study conducted for the coal-export terminals. The study costs are billed to the applicant. The process can be expected to last at least a year and involve public hearings.
The Council will be the public agency that determines any safety implications of shipping oil by rail. Safety has become an even more volatile topic after more than 40 people died in an oil-train explosion in the tiny border town of Lac-Megantic, Quebec. The disaster triggered a fierce public debate about the safest way to move crude oil: train or pipeline.
Bakken producers turned to trains because there simply isn’t enough pipeline capacity in the U.S. But oil trains do not face the same kind of significant regulatory reviews — and hurdles — that delay pipelines such as the controversial Keystone XL. That pipeline project is still being reviewed by the Obama Administration. Opponents, who worry that the confluence of greater demand and weaker oversight could mean more Lac-Megantic-like disasters up ahead, are prepared to make their case as EFSEC proceeds.
Although the tiny agency is new to oil terminals, it’s no stranger to contentious proposals. From 1999 until the project was scrapped in 2006, the Council dealt with a gas-fired power plant at Sumas on the Canadian border in Whatcom County. At one point, the EFSEC recommended denying a permit only to be overruled by Gov. Gary Locke, who approved it, with conditions.
High County News, a prominent environmental site, headlined its coverage of the Sumas plant process with: “An energy boom hits Northwest towns.” Indeed.
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