With plans for new oil terminals still pending throughout the Pacific Northwest, low oil prices are hampering operations at existing crude-by-rail operations in the region.
Five different projects to transfer crude from trains to ships have been proposed in Washington, including what would be the nation’s largest oil-by-rail terminal in Vancouver. While the backers of such projects have said current declines won’t affect their plans, some existing operators in Oregon have not fared well in the current market.
Global Partners, the owner of a crude oil terminal on the Columbia River in Clatskanie, Oregon, announced Thursday plans to lay off 28 of its 47 workers at the facility. The reduction comes in response to poor crude oil markets and declines in facility operations.
The facility was built as a biofuels refinery but quickly went bankrupt before it began accepting trains of crude oil in 2012. Global Partners now says it plans to clean some of its tanks and shift operations to ethanol.
“While any workforce reduction is difficult, we believe these actions are necessary to work through this challenging crude market,” Global Partners CEO Eric Slifka said in a news release. “The implementation of all these initiatives helps provide us with flexibility to invest in our business in the future. We will continue to monitor market conditions and take other appropriate action as necessary.”
Meanwhile in Portland, a Pacific Terminal Services facility specializing in bunker fuel for ships on the Willamette River has essentially shut down operations after losing its contract with Chevron, which accounted for nearly all of the terminal’s business.
Kevin Buffum, general manager of Pacific Terminal Services, said Chevron did not cite the declining oil market but instead the decrease in local demand for ship fuel. Pacific Terminal Services is now searching for a new contract at a time when energy companies might not be as willing to pay for excess storage.
When oil prices are in decline, demand for excess storage typically follows, meaning energy companies have less use for facilities that simply store and transfer crude products without the ability to refine them.
“If Chevron or some other supplier fills up the tanks today and by the time they sell through that product the value of it, or the price they’re able to get for it drops, that’s painful,” he said. “It’d be a good time to have a pretty empty terminal.”
Buffum said the facility typically has about a dozen active employees, and he didn’t know how long it could last without filling the void left by Chevron’s business.
“I suspect things have slowed down for everybody. As you’re driving about, there’s not nearly as many unit trains being spotted,” Buffum said, referring to the mile-long trains black tank cars that carry crude oil.
Washington has not seen the same decline in oil train traffic as Oregon, according to Dave Byers, the head of spill response for the state’s Department of Ecology.
One difference between the states, Byers said, is Washington currently has no oil terminals and all oil train traffic goes directly to refineries.
That would change if any of Washington’s several proposed terminals are built. Crude-by-rail projects have been proposed in Tacoma, Grays Harbor and Vancouver. The largest of those, a joint venture between oil company Tesoro Corp. and logistics firm Savage Industries in Vancouver, is currently undergoing a review from Washington’s Energy Facility Site Evaluation Council.
The energy council will make a recommendation to Gov. Jay Inslee, who ultimately decides whether the project is permitted.