December 20, 2013 [OPIS] - Some West Coast refiners are already planning to build crude-by-rail facilities, aiming to capitalize on the net short California crude market and the price advantage of Midcon crude versus Alaskan North Slope and foreign crudes.
WesPac Energy LLC and Oiltanking Holdings Americas Inc. have also emerged as a potential player in the crude rail logistics arena on the West Coast. Wespac Energy-Pittsburg LLC (WEP) – a joint venture between WesPac and Oiltanking – plans to build a rail terminal and a storage terminal at Pittsburg in Northern California.
Pittsburg is in eastern Contra Costa County in the East Bay region of the San Francisco Bay Area.
More price-advantaged Midcon crude is making its way to the Gulf Coast via pipelines, raising concerns about a potential supercongestion in the South next year and leading crude players to explore new market opportunities on the West Coast and East Coast.
This WEP project, like other crude-by-rail projects in California, is in the middle of the permitting process. The City of Pittsburg is the lead agency for the Environmental Impact Report (EIR), and the Final EIR is to be submitted to the City Council and Planning Commission for consideration in the fourth quarter of 2013.
The WEP project will include creation of additional energy infrastructure to safely receive, store and transfer crude oil between trains, pipelines, ships and storage tanks. Also, WEP plans to reactivate and modernize oil storage terminal and marine terminal at NRG Pittsburg Generating Station (formerly PGE power plant).
WEP will build a new oil transload rail terminal at nearby BNSF rail interchange yard. The project will also include new connecting pipelines between a storage terminal and a rail terminal, and also between a storage terminal and the KLM pipeline.
If everything goes as planned, this Bay Area crude-by-rail project could be operational in the second half of 2015.
WEP plans to begin construction of a rail terminal in the first quarter of 2014. The 18-month construction period will also cover four storage tanks and pipelines.
WEP aims to start building a marine terminal and supporting facilities, including additional storage tanks, in the fourth quarter of 2014. Construction will take 18 months.
According to WEP, the new crude-by-rail terminal will be able to deliver crude via pipelines to Shell’s Martinez refinery, Tesoro’s Avon refinery, Valero’s Benicia refinery and Phillips 66’s Rodeo refinery.
The tank farm, dock and pipeline routes will cover 100 acres. The dock lease area is managed by the City of Pittsburg.
San Pablo Bay Pipeline is already connected to the terminal, and pipeline connection to KLM Pipeline is less than half a mile away. The pipeline between rail facility and terminal will be new.
For the rail terminal, it will be located in nearby BNSF/UPRR transfer yard. The terminal, which is designed for five trains a week, is to handle up to 104 train cars.
For the storage facility, it will have four new 200,000-bbl capacity internal floating roof storage tanks replacing existing tanks. It will receive oil from the rail terminal as well as KLM Pipeline.
To support its project, WEP promises 295 union construction jobs for up to three years and 40 full time operations employees. WEP will pay property tax of about $350,000 a year and about $450,000 for Tidelands Lease revenues. Annual operating expenses are pegged at about $5 million.
