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Taunting Maggie’s Ghost

Oil export change stirs 40-year old concerns over spills

Wednesday, January 6, 2016

Suddenly, big oil has the political prize it has coveted for decades.

The oil export ban, signed into law by President Gerald Ford in 1975, is history. It was an emergency response to a decision by Arab oil producers not to sell to the US. The Arab boycott had quadrupled the global price of oil and triggered a stock market crash. Ford called the export ban “the first step to energy independence.”

Congress repealed the ban last month, and U.S. oil producers are free to export crude oil to the world market.

Speculation flourishes over the impact on Washington state, positioned to become the funnel through which North Dakota will pour its oil on China.

That prospect raises echoes of 1977 and U.S. Senator Warren Magnuson’s “little amendment” to the Marine Mammal Protection Act. The amendment says nothing about marine mammals. It says a lot about a growing threat to Puget Sound all those years ago―from a convergence of oil tankers.

In language that provides no wiggle room, it prohibits the altering (along with three other words that mean “altering”) of any coastal oil facility that “will or may result in any increase in the volume of crude oil capable of being handled at any such facility… other than… for consumption in the State of Washington.”

We’d have to try pretty hard not to understand it: no increase in the capacity to handle crude oil on Puget Sound (it does not say refine) beyond what’s needed to meet the demand in Washington.

The Magnuson amendment has effectively kept supertankers—those bigger than 125,000 tons—out of Puget Sound. So long as oil refiners aren’t allowed to re-rig their docks to handle the big guys, there’s no place for them to unload.

Steered through both houses by a bipartisan Washington delegation, the amendment was adopted by unanimous consent without hearings or debate.

The restriction infuriated Washington’s oil-chummy governor, Dixy Lee Ray, famous for being photographed at the wheel of an ARCO tanker on Puget Sound. She denounced Magnuson, her fellow Democrat, as a “dictator.” The amendment ruined the governor’s and the oil industry’s hopes for a superport at Cherry Point, to process the booming oil riches of Alaska as part of a world-class petrochemical center.

Thirty-eight years later, the Puget Sound Magnuson described in his amendment as “a fragile and important national asset” is still a fragile and important national asset. There have been spills, but no collisions of tankers on the Sound, no catastrophes of the kind the senator set out to prevent.

Much has changed and is about to change, including the oil-carrying traffic count on the Sound and other coastal waters. But Maggie’s amendment remains, possibly more important than ever.

While oil lobbyists and their congressional beneficiaries worked to legalize exports, advocates of both sides wondered what would become of the five Puget Sound refineries, once crude oil from North Dakota could be shipped directly to China with no processing.

Would the refineries—one at Tacoma, two at Anacortes, two at Cherry Point—shift from refining oil to the business of selling it to foreign buyers?

Could they go both ways, so to speak? Continue refining crude while bringing in more to export without processing?

Coming or going, loaded oil tankers present the same risk to the Sound that worried Magnuson. Given a pent-up desire to send more U.S. crude oil to the world market, it’s easy to imagine a moosebash of oil tankers, oil barges and the myriad small vessels that tend them, converging in the sound and the straits. An accident begging to happen, no matter how bravely the U.S. Coast Guard tries to keep it all under control.

State Senator Kevin Ranker, who represents the San Juan Islands, Skagit County, and south Whatcom County, calls the concept of refineries becoming crude oil pass-throughs “extremely scary.”

Not just the environmental ruin that a major spill in the San Juans would bring about; there’s a parallel concern over the jobs of refinery workers and their families in local economies that would come to be dominated by crude oil rather than refined products.

“Our refineries offer good family wage jobs and those are at risk,” Ranker said. “If we face a situation where we become an export center instead of refining fuel for the Northwest, all those jobs are threatened.”

All of that’s made less likely, however, by the Magnuson amendment. If refinery owners want to make money as pass-through terminals, it appears they’ll need a way to do it without adding as much as a bucketful of capacity. (Unless they can persuade Congress to repeal Magnuson. That approach was tried in 2005 by Alaska Senator Ted Stevens, who failed to find a single co-sponsor.)

In its carefully redundant fashion, the Magnuson amendment says no federal “officer, employee or other official” shall approve a permit that would result in any increase in volume of crude oil “capable of being handled” (it does not say “refined”) at any such facility in Puget Sound.

The amendment survives untouched by December’s dramatic shift in U.S. oil policy, says Kristen Boyles, an attorney with the nonprofit environmental law firm Earthjustice.

“There’s nothing in the new legislation that trumps Magnuson,” Boyles said. “Any argument from oil companies that lifting the export ban somehow undercuts Magnuson would truly be a stretch.”

Beyond Puget Sound, however, a list of proposed would-be oil terminals provides material for tanker collision and oil spill nightmares.

A tally from Sightline, the nonprofit research institute in Seattle:

• At Vancouver, on the Columbia River, Tesoro-Savage wants to build what it claims to be the largest oil terminal in the United States. It would take in four trainloads of Midwest oil per day—that’s 360,000 barrels—then ship it down the Columbia River and up the coast to Puget Sound refineries.

• Also at Vancouver, but in smaller headlines: NuStar Energy, already operating a bulk oil terminal on the river, wants to install oil-by-rail and ship 22,000 barrels per day.

• Up the coast at Grays Harbor, three companies are pressing for permits to ship a combined 171,000 barrels per day, arriving by rail and leaving by ship and barge through a narrow 11-mile shipping channel to the seacoast. Then there’s the Trans-Mountain Pipeline from Edmonton, Alberta to Burnaby, BC. Its owners wish to deliver, daily, 590,000 barrels of diluted bitumen—the heavy, sticky and highly toxic product of Canada’s tar sands enterprises—onto ships headed through the Salish Sea.

It’s been a long time since the last truly bad oil spill in Washington waters. Twenty-seven years ago, a tugboat crashed its oil barge Nestucca off Grays Harbor, fouling shorelines from Newport, Ore., to northern Vancouver Island with 231,000 gallons of heavy bunker oil. (Sightline Institute published a detailed account in its blog of Sept. 15, 2015)

There are only rough estimates of environmental damage from Nestucca. U.S. Fish and Wildlife figures 52,000 to 78,000 seabirds died. The Canadian government had to close fisheries for six months. The incident spawned lawsuits and created long-term hostility between the governments of Washington and British Columbia.

The spill was dwarfed and largely forgotten three months later. On March 24, 1989, the tanker Exxon Valdez set Olympian records for the most environmental destruction in a single accident by a boozed-up ship’s captain asleep in his bunk.

No straight line links the approval of oil exports to the likelihood of an oil spill. Still, an increased collision risk travels with increased traffic, and at some point begins to increase at an increasing rate.

Sightline Institute, refining numbers from state studies, has predicted a 40 percent increase in oil tanker and oil barge traffic, if all the proposed new oil terminals were to win approval. That was before congress approved the export of domestic oil. 

Both of Washington’s U.S. Senators publicly opposed lifting the export ban, then voted to lift it after President Obama announced bipartisan agreement on the overall $1.1 trillion spending bill, with the oil export legislation riding in the back seat.

Senator Maria Cantwell’s office said the omnibus bill included “too many goodies” to refuse. Included are sales tax deductions for taxpayers living in states like ours without an income tax; new tax incentives for renewable energy; a low-income housing tax credit; and more money for the Hanford nuclear cleanup.

A spokesperson for Sen. Patty Murray, who had very publicly opposed lifting the oil export ban, said the Senator was “disappointed that the Republican majority insisted on including a repeal of the export ban in the year=end budget deal.” She was persuaded to vote for it by increased investments in education and health care, tax cuts for low-income families, and renewal of the Land and Water Conservation Fund, all measures that would survive only as trade goods for lifting the oil export ban.

The LWCF, which had lapsed under Republican opposition, has been one of the most popular environmental laws Congress has ever passed. It pays for public purchase of special, threatened natural areas throughout the United States, using money collected from offshore oil and gas leases.

Rushing to produce the omnibus bill, Congress could not find time to tighten safety rules for ocean tankers and railroad cars―such as speed limits for oil tankers or more tug escorts for such hazardous cargo as Bakken crude oil, a known detonator with a lower flash point than gasoline.

The Washington Department of Ecology’s spill prevention section manager, Scott Ferguson, says it’s too soon to guess how great an increase in train and tanker traffic will result from lifting the export ban.

“So much depends on oil prices around the world,” he said. “The effect of export may not get going for a couple of years.”

It’s hard to forecast the result of brand-new legislation, even to action the oil industry has demanded for decades. But the U.S. Government Accountability Office gave it a try. In congressional committee testimony on the export ban, the GAO predicted a 40 percent increase in U.S. oil production within 20 years. They did not convert the estimate into numbers of oil trains and seaborne tankers.

Some of the oil will go east, headed for European ports. But it seems nearly certain that most of it will follow the shortest rail route from the oil fields to the Pacific, and the most direct seaborne route to China. That would be us.

Sugar Ray
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