Oil export outfit details plans for the Port

If Terminal 3 at the Port of Grays Harbor is developed as a rail-to-ship crude oil exporting facility, it could generate immediate construction jobs, up to 50 permanent jobs and lead to $50 million in new capital investment, according to the company eyeing the Hoquiam site.

US Development Group LLC has proposed what is known as a bulk liquids rail logistics facility at the terminal, where crude oil would be brought in by rail and held for a short time in tanks on the site, then loaded on ships.

Making the company’s first public presentation Tuesday, Kevin LaBorne, the company’s business and development manager, came to the monthly Port Commission meeting and told commissioners that if the facility is approved and permitted, estimates are for as many as two trains a day and five ship calls a month at the site.

The life of the project, he said, would be at least 15 to 20 years, even with new pipelines being proposed and built for the crude, which largely comes from fields in North Dakota, Colorado, Wyoming, Southwest Texas and Alberta, Canada.

“We have a pretty strong forecast about what the market will support,” LaBorne said.

The company currently has an access agreement with the Port to study the site. The cargo would arrive in fully contained rail cars and be unloaded via pipe connections into storage tanks until a transport vessel arrives.

LaBorne said US Development is a private company operating since 1995, specializing in the rail market with a number of logistics terminals around the country. The company is headquartered in Houston, with 12 new large-scale terminals built over the past 10 years. Terminals are in New York Harbor, Baltimore, Louisiana, Southern California, North Dakota, Colorado and Texas.

“We generate a lot of jobs where we bring terminals to market,” LaBorne said. “Those are immediate construction jobs, longshore jobs for marine operations and our rail terminal operations would bring 30 to 50 operators to a new facility.”

LaBorne told Port commissioners the company has a good track record in the communities where it does business and intends to reach out to community groups on Grays Harbor.

The crude-by-rail market has largely sprung up because of the large amount of North American crude oil now being produced, with few other ways to move it to refineries on the West Coast.

“These are old fields that are now being developed because the technology has gotten much better,” LaBorne said. “… We have the economics now, we have the technology and it’s growing rapidly.”

Estimates are for the United States to surpass Russia and Saudi Arabia as the leading producer of crude oil in the world, he predicted.

“What’s happened is that production has grown so quickly, there are proposed pipelines and pipeline projects, but several of those are years off and some won’t get built, for a variety of reasons, whether they be economic or environmental,” LaBorne said. “What’s happened is the railroads have stepped up and they have picked up the transportation component in filling a gap to get this new crude oil production to market.”

The idea would be to move the crude from the Port to refining centers on the West Coast or the Gulf of Mexico.

The company believes the Grays Harbor site is an “excellent fit” because there is “excellent rail access into the Port” through Puget Sound and Pacific Railroad, LaBorne said. The dock also is “a relatively modern dock” with deep draft for large ships.

“The short distance between the dock and open ocean cuts down significantly on shipping economics,” LaBorne noted.

Plans call for the facility to use about 150 acres of upland area for the rail facility and tank farm, with piping connected to the dock.

A project description prepared by the company said it would supplement and strengthen already existing spill prevention and response plans for the Harbor, and LaBorne said the company has had “no recordable spills” at any of its facilities since it has been operating.

“Though spills involving the equipment used by these facilities are rare, state-of-the-art, site-specific spill prevention and response plans will be developed to ensure environmental protection,” the company said in its prepared statement on the site.

“We’re in the very preliminary phases of our feasibility study,” LaBorne said.

In general, the rail terminal would have two side-by-side unloading tracks to handle about 30 cars on either side of a platform walkway that runs between the cars. The cars are connected via hoses that feed by gravity into a central manifold beneath the ground. The crude is then pumped into storage tanks capable of handling up to 1.1 million barrels until it is piped into an arriving ship. There also would be a rail area for storage of cars not being unloaded, and the company has plans for 120-car trains to the facility.

The terminal that is envisioned would be “designed to the highest standards of safety, security and environmental protection, which is standard for all of our new facilities,” LaBorne said.

“It’s a very safe and efficient operation,” he added.

Port Commission President Chuck Caldwell questioned what the lifespan of the project would be considering other methods of transporting the crude are under consideration.

“In terms of our harbor facilities, those are usually 20- to 30-year leases,” LaBorne said. “There are a number of pipelines being proposed that will clear some of the growing production. But, there have also been a number of market studies that have demonstrated the production will still exceed the pipeline capability. So rail will continue to serve as an important transportation component … This is a long forecast.”