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Issue #588

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Intermodalism

Inland Ports

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2014 Media Kit
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New U.S. West Coast energy projects face tough opposition

By: | at 07:00 AM | Intermodal  

The West Coast of the United States, long a battle ground for industrial and environmental interests, is set for another round of disputes as the region attracts key energy projects.

Huge new oil and gas fields have changed the way energy is transported across the United States, opening up the prospect of gas exports to Asia and increasing shipments of oil by rail. As this happens, the West Coast, from California to Washington, has become a major focus for energy developers.

Veresen Inc’s Jordan Cove liquefied natural gas (LNG) project in Coos Bay, Oregon, received approval from the Department of Energy on Monday to export gas to needy importers in Asia. Another project further north, known as Oregon LNG, is expected to receive similar approval within two months.

The two developments, both of which still need construction permits, would be the first of their kind on the West Coast outside of Alaska and represent a potentially new era for the Unied States, where a drilling boom has pushed output to record highs. The outcome of these projects could also set the standard for other energy developments in the region.

But opposition remains.

“Jordan Cove still needs a slew of federal and state permits to begin construction,” said Zack Malitz of San Francisco-based environmental group Credo, which is opposed to exports because it could lead to more drilling. “We still have time to sound the alarm.”

OIL, COAL

Energy projects have long met opposition in West Coast states where a stronger environmental lobby has made development approvals tougher to obtain than in other more oil industry-friendly states like Texas or Louisiana.

The strength of that opposition is being tested again as coal and oil producers look to the West Coast to broaden their business.

In recent years, mining and shipping industries have tried, and sometimes failed, to gain permission to move coal through ports in the Pacific Northwest to reach Asian markets. The Port of Coos Bay dropped its plans for a coal export terminal last spring after environmental challenges.

Now, three more export terminals remain on the drawing board. Backers of the Morrow Pacific project in Oregon expect to clear regulatory hurdles in the coming months.

Meanwhile, oil producers looking to tap west coast markets have proposed a number of terminals to receive and refine crude oil delivered on trains. Crude by rail has become a major industry in recent years, as new output overwhelms the existing pipeline network. But a number of explosive derailments have given pause to states considering more train traffic, especially loads carrying grades of crude oil from North Dakota considered more volatile than others.

In Washington State, which has the potential to become a major oil port if all pending projects are approved, opposition to moving more crude by rail is growing.

Public meetings held in October regarding a crude by rail terminal in the Port of Vancouver proposed by Tesoro Corp and Savage Services garnered tens of thousands of comments, many of which centered on concerns about crude train crashes and spills.

The project is in the permitting phase, and the final decision lies with Governor Jay Inslee.

Valero Energy Corp’s plan to build an offloading facility at its San Francisco-area refinery was pushed to the first quarter of 2015 from late 2013 to allow time for an environmental review after opponents voiced concerns to local officials.

The surge in the transport of crude oil by rail into California has caught the attention of lawmakers in Sacramento, who last week held a hearing to examine whether more resources should be dedicated to preventing and responding to accidents.

Currently, less than 1 percent of the state’s crude oil is delivered by rail. But with at least six new crude-by-rail facilities planned or under construction in California, that figure is expected to reach 25 percent by 2016.

“Regardless of whether it takes two years or four years, this is a significant change that represents an emerging threat to California’s natural resources,” Tom Cullen, administrator of the Department of Fish and Wildlife’s Office of Spill Prevention and Response, said at the hearing last week. (Reporting By Edward McAllister in New York, Rory Carroll in San Francisco, Patrick Rucker in Washington D.C. and Kristen Hays in Houston; Editing by Joseph Radford)