The boom in United States oil production was supposed to make the construction of oil terminals at ports a thing of the past. Not so fast.
Now Dutch oil storage giant Royal Vopak NV wants to turn an empty lot at the Port of Long Beach into a huge deep-water terminal so tankers from overseas can offload oil.
That comes as a surprise after Plains All American Pipeline LP dropped plans for a similar oil terminal at the Port of Los Angeles last year, citing decreasing dependence on imported oil as well as permitting issues. The Houston company in November abandoned its $500 million terminal plan, writing off $125 million, in favor of rail projects to deliver domestic crude across the country. A Plains executive said it will be “interesting” to see if Vopak’s plan plays out.
But Vopak said it can make its terminal work at the port despite the falling demand for foreign crude. Company executives had been keeping a close watch on the Plains project at Pier 400 and believe that there’s demand for another terminal. Vopak’s sole business is storing and handling liquid fuel products, so when Plains pulled out, the company saw an opportunity to increase its market share.
“We’ve been interested all along,” said Michael LaCavera, general manager for Vopak on the West Coast. “We have potential customers very interested in having another berth capable of deep-water oil imports.”
The Long Beach Board of Harbor Commissioners earlier this month approved basic terms for the Vopak project, allowing the company to start an environmental impact study. The new terminal would be built on 28 acres at two berths on the east end of Pier T, known as Pier Echo, which the Navy used as a shipyard until the 1990s. The project is expected to take four-and-a-half years.
The terminal would bring in 21 million to 55 million barrels of imported oil a year, depending on how many customers it gets, increasing the amount of oil going through the port by 11 percent to 28 percent. (Plains’ would have handled 51 million barrels.) Vopak’s would be the fourth oil terminal at the Port of Long Beach and increase Vopak’s presence in Southern California, where it currently has two locations – one at the Port of Long Beach and one at the Port of Los Angeles.
Vopak, which has almost 4,000 employees worldwide, will invest $120 million for land-side improvements for the first phase of construction. The company would not say what the total project would cost.
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