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A primer on Pembina terminal project

Photo Credit: COURTESY OF PORT OF PORTLAND  - Pembina hopes to build one of the most expensive projects ever undertaken in Portland along this strip of Port of Portland land in North Portland. At right is West Hayden Island. Raging Northwest debates over fracking and fossil fuel exports are hitting close to home in Portland, thanks to a Canadian company’s proposed propane-export terminal at the Port of Portland.

Pembina Pipeline Corp.’s half-billion-dollar project could have sizable impacts on local jobs and business, global and local greenhouse gas emissions, and even local city, county and school revenues.

The terminal has set off a major jobs vs. environment fight that could take months to resolve, if not years.

Here’s a primer to help Portlanders understand the project and what’s at stake.

What’s it mean for local jobs and businesses?

Pembina estimates it will hire 600 to 800 construction workers to build the complex over about a two-year period. Total construction costs are estimated at $500 million, ranking as one of the most expensive developments ever in Portland. To put that in perspective, Tilikum Crossing, the new bridge opening this summer on the Willamette River, cost $135 million, and TriMet’s Orange MAX line connecting downtown Portland to Milwaukie is costing $1.5 billion.

Once it’s built, the number of permanent employees operating the terminal would be modest, roughly 30 to 40 people serving as rail car unloaders, technicians, mechanics, millwrights and administrators. Their salaries will average $70,000 to $120,000.

Pembina says about $250 million of the construction costs will be spent locally, plus $25 million to $30 million annually on labor, energy, supplies and other operations. Those expenditures will generate more spinoff jobs.

What’s in it for local governments?

Hefty property taxes on a project valued at a half-billion dollars appear to be one of the project’s selling points for Portland Mayor Charlie Hales.

The Port of Portland estimates a terminal like the one Pembina proposes could generate $92 million in property taxes the first 10 years. More than $37 million would go to the city of Portland, including urban renewal; more than $30 million to public schools; more than $20 million to Multnomah County; and more than $2 million to Portland Community College.

Pembina insists it won’t seek any government subsidies to build the complex.

What is Pembina proposing?

The company, based in Calgary, Alberta, Canada, hopes to ship propane in compressed, liquid form on trains at least 100 cars long from its Redwater Facility northwest of Edmonton, Alberta. Daily trains carrying about 1.6 million gallons of propane would journey south into the U.S. and west through the Columbia River Gorge on either side of the river, right up to the Port’s Terminal 6 in the Rivergate Industrial District of North Portland. Pembina would lease a vacant 40-acre waterfront site along the Oregon Slough, the body of water between the mainland and West Hayden Island that leads to the Columbia River. Pembina also may seek some adjacent port land now leased by Honda. Propane would be unloaded into eight smaller holding tanks with a combined capacity of 1 million gallons of propane. Then the propane would be chilled and stored 15 days in two double-walled tanks up to 150 tall and capable of holding a combined 33.6 million gallons. Two or three times a month, the propane would be piped about 50 feet across the shoreline to ocean-going ships parked at Berth 607, a dock made from a converted World War II-era Liberty ship also used for Honda imports.

What regulatory hurdles does Pembina face?

For now, the company needs a zoning code amendment to allow its 50-foot pipeline to transfer propane from storage tanks to ships, because that stretch includes the shoreline, which is in a special environmental zone. Such zones permit trucks or railroads to carry hazardous substances like propane, but not pipelines. The zone change may be critics’ best avenue to block the project, since a propane plant is an allowed use on the industrial site. The Portland Planning and Sustainability Commission is considering testimony on a broad panoply of safety, environmental and other issues, and will make a recommendation on the zone change to the Portland City Council. The City Council’s decision could be appealed to the state Land Use Board of Appeals, and ultimately the Oregon Court of Appeals.

Why are environmentalists opposed?

Portland environmentalists are appalled that the city might become a cog in a system to export Canadian fossil fuels to Asia and thus worsen global warming.

The environmental zone change is relatively minor compared to the greenhouse gas emissions from the project both here and in Asia. The propane terminal would be one of the largest electricity consumers in the city, boosting overall carbon emissions in Portland by 0.7 percent, or 20,000 metric tons per year. That may be hard to swallow for a city that works so hard to reduce its carbon emissions. Last month, the Obama administration named Portland a Climate Action Champion, bestowed for the city’s progress in this area.

But carbon emissions anywhere affect the global climate, and emissions in Asia would be massive. City planners calculate that if the exported propane is consumed as fuel in Asia, that could add 3 to 5 million metric tons of carbon emissions into the atmosphere annually, about 0.01 percent of all global emissions. The Center for Sustainable Environment, led by West Linn resident John Talberth, calculates the social cost of those carbon emissions, using a methodology from the U.S. Environmental Protection Agency, would amount to $134 million to $260 million per year.

But isn’t propane cleaner than other fossil fuels?

Yes. When burned, it produces little of the smog and cancer-causing particulates associated with coal, diesel and gasoline. And it produces fewer carbon emissions, which is why it’s considered a “transition” fuel to help move the world to lower carbon emissions until solar, wind and other zero-emissions energy sources can fully supplant fossil fuels. Under the Clean Fuels Program being promoted by environmentalists and Gov. John Kitzhaber in the Oregon Legislature, propane is considered an alternative vehicle fuel that can reduce the carbon impact of diesel and gasoline.

“If you’re going to be successful in the battle against climate change, we’re going to need transitional fuels,” said Curtis Robinhold, deputy executive director of the Port of Portland, at last week’s Planning and Sustainability Commission hearing.

Pembina said more than half, if not all, its exported propane is expected to be used to manufacture plastics in Asia, replacing the use of oil. Propane is an ingredient — not a fuel source — to make polypropylene, also called propylene, a form of plastic.

Propylene plants are very energy- and carbon-intensive, Talberth says. Projected emissions from a proposed Texas plant were calculated at 58 percent of the emissions that would result if the propane was used instead as a fuel, according to the Center for a Sustainable Economy. That analysis doesn’t factor in emissions from transporting the propane from Canada to Portland to China, Talberth says.

Natural gas, the source of propane, does contribute about half the carbon emissions of coal as a fuel. However, natural gas loses that advantage quickly if it escapes into the atmosphere during the drilling process or in transmission via pipelines. That’s because the prime ingredient of natural gas is methane, which is 20 to 30 times more potent than carbon dioxide when it comes to trapping heat in the atmosphere and causing global warming.

How safe would this terminal be?

As a company, Pembina proudly notes it had zero lost work days in all of 2014 due to worker accidents among its 1,000-plus employees. Its leased rail cars are safer than those used for oil that have led to several high-profile derailments and explosions. The giant propane storage tanks planned in Portland would be double-walled. The site would be staffed 24 hours a day, and equipped with emergency power and a flaring system, should leaking propane need to be burned off. The facility must meet the strict seismic code adopted in Oregon in 2014. Access to the port terminal is limited due to stricter security procedures put into place by federal officials after the Sept. 11, 2001, bombings.

But Pembina has fended off questions about the potential “blast zone” should one of its train cars or tanks filled with propane explode, until it was prodded to answer those concerns at last week’s hearing. Eric Dyck, the vice president of Pembina Marine Terminals who will serve as a project manager here, said computer modeling the past two years determined a potential blast zone for propane with a 300-yard radius. Dyck said that was not specific to the Portland project and more research needs to be conducted.

The closest residents live in houseboats about 1.2 miles away from the site.

Critics of the plant, including some Hayden Island residents, are circulating a “white paper” that suggests there could be a blast zone of more than 2 miles, threatening downtown Vancouver and Portland’s St. Johns neighborhood, among other areas. They raised the specter that an explosion in a single rail car or tank could send shrapnel into neighboring cars and tanks, causing a domino effect.

“It’s a ticking time bomb in the middle of a very special place,” testified David Red Thunder, who lives on Hayden Island.

Portland Fire & Rescue will hire an independent consultant to evaluate such safety concerns in advance of the next Planning and Sustainability Commission session on March 17.

Where will the propane come from?

Pembina says its propane will come as a byproduct from natural gas extracted from the Western Canadian Sedimentary Basin in Alberta, not from oil sands deposits. Hydraulic fracturing, known as “fracking,” is commonly used to extract that natural gas, and the company makes no bones about that. Fracking involves injecting massive quantities of sand, water and chemicals to force open fissures in porous rock to extract oil and gas from underground shale.

Why did Pembina choose Portland?

Pembina found a parcel at the Port of Portland that’s relatively small and shovel-ready, well-served by rail lines and a shipping berth. Portland is relatively close to Asian markets where the propane will be sold, and boasts a skilled labor supply to build and operate the plant.