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Northwest On Verge Of Becoming Pacific Crude Oil Gateway

Tom Banse
Northwest News Network

ABERDEEN, Wash. – The Northwest is on the verge of becoming a gateway for crude oil. Three different developers have plans to use docks on Grays Harbor, Washington to transfer crude oil from trains to ships. Other projects are getting off the ground in Tacoma, Vancouver, B.C. and on the lower Columbia River.

There was a huge turnout Wednesday night at an introductory public workshop in Aberdeen, Washington. The response indicates crude-by-rail may be the region’s next big environmental controversy.

There's a growing glut of oil in eastern Montana and North Dakota. It’s part of the shale drilling revolution, which promises to turn North America from an energy importer to an exporter. But pipelines can’t keep up with the gusher of production. Port of Grays Harbor CEO Gary Nelson says that creates opportunities for railroads and ports to get oil to market in other ways.

“You’ve always got to look for the next new thing.”

Nelson spoke to a standing-room-only audience in Aberdeen. The crowd was testy. Around the sides of the meeting hall, a trio of prospective crude oil terminal operators handed out literature and fielded questions.

One questioner asked which refineries are going to be fed by rail. Other people asked about oil-spill response, rail congestion, how many jobs would be created and how big the oil tankers could be.

In many respects, this event represents a public "coming out" for a business opportunity that is catching the eye of multiple Northwest ports and companies. Some examples:

• Near Clatskanie, Oregon, a Massachusetts firm has paid $95 million for a newly established crude terminal on the Columbia River.

• In Tacoma, the port just approved an expansion of the Targa Sound Terminal so it can receive crude and other liquids by rail.

• Up in British Columbia, energy giant Kinder Morgan plans to greatly expand its pipeline and Vancouver terminal to supply Asian markets.

• In Hoquiam, Washington, U.S. Development Group proposes to build an oil terminal.

• Separately nearby, Imperium Renewables, the owner of a biodiesel refinery, wants to diversify into crude oil shipping.

Add Aberdeen, and you’ve got six potential crude oil terminals in the Northwest, versus having just one half a year ago.

On the Aberdeen waterfront, Westway Terminal Company Vice President Robbie Johnson explains why this place appeals to his company.

“Grays Harbor is in the catbird's seat for handling crude by rail. It’s very close to deep water. It’s a desirable location. It’s very pro-business. Labor is available. We’re very, very excited about this.”

Johnson says federal law bans the export of U.S. crude oil to foreign countries. So the customers for the crude rolling our way will be coastal refineries in California and northwest Washington.

“We are very good stewards of the environment," Johnson says. "We have not had spills. We’re very careful.”

But the potential for spills is just what they’re worried about across the bay.

Cannery workers are shucking freshly harvested razor clams at Brady’s Oysters. Co-owner Korey Engvall says his seafood company also cultivates about 30 acres of oyster beds in Grays Harbor.

“There’s a large record of oil being spilled everywhere it is transported," he says. "So, you know, it makes us very nervous. We do not like the idea at all.”

Korey’s dad, the business namesake Brady Engvall, previously opposed a plan to export coal from Grays Harbor. That’s now shelved. He argues crude would be worse.

“This is just a risk we can’t afford to take.”

Others around the harbor weigh the risks and benefits differently. As of last month, Grays Harbor County had an unemployment rate of 12.4 percent. That’s the second highest among Washington counties. The crude terminal developers in this area say they’ve received wide support from local elected officials hungry for new, family-wage jobs.

On the Web:

Oil Trains On The Rise In The Northwest (EarthFix, 12/4/12)

Now semi-retired, Tom Banse covered national news, business, science, public policy, Olympic sports and human interest stories from across the Northwest. He reported from well known and out–of–the–way places in the region where important, amusing, touching, or outrageous events unfolded. Tom's stories can be found online and were heard on-air during "Morning Edition" and "All Things Considered" on NPR stations in Washington, Oregon, and Idaho.