City may levy huge fee on propane exporter as carbon offset
The Portland Planning and Sustainability Commission, concerned about promoting fossil fuel use if it approves a propane export terminal, may seek to charge the Canadian exporter $6.2 million a year to offset its carbon emissions.
Alberta-based Pembina Pipeline Corp. wants to build a $500 million propane export terminal at the Port of Portland, bringing the fuel here by train from Canada and then shipping it to Asia.
The Planning and Sustainability Commission plans to hold its final hearing on the controversial project Tuesday, April 7, and then vote whether to grant Pembina a required zone change. Pembinas proposal has raised the alarm bell among environmentalists concerned about its carbon footprint, and among North Portland residents who worry about potential explosions and other disasters.
Now the proposed carbon offset proposal and its hefty price tag could be another obstacle for Pembina.
Pembina has argued that much of its propane will be used in Asia to displace coal and oil, thus reducing carbon emissions, or to make plastics. When propane is used as an ingredient in plastics manufacturing, the carbon is embedded in the products and doesnt get emitted as a greenhouse gas that contributes to global warming.
A subcommittee of Planning and Sustainability Commission members, including Chairman Andre Baugh, devised the new carbon offset proposal. They presumed that half the propane would be used to make plastics, and another 30 percent would be used to displace coal and oil. But the emissions resulting from the remaining chunk of fuel would be sizable, the equivalent of 921,352 metric tons of carbon emissions a year. Using the 2014 price of carbon emissions from Europes cap-and-trade system, $6.77 a ton, that translates into more than $6.2 million a year.
Commissioners proposed the city levy that amount over a 25-year period, using the funds to reduce carbon locally, such as by promoting wind and solar electricity, or planting trees.
Its not clear yet if the city will go for the $6.2 million annual charge, or its a deal-breaker for Pembina. Tom Armstrong, the city supervising planner who is coordinating the land use proceedings, says its best to put that figure into perspective.
That $6.2 million works out to be about a penny a gallon for the 560 million gallons that theyre looking to move through here each year, Armstrong said. The current wholesale price of propane is about 70 cents a gallon, he said, and thats at a pretty low level right now.
Safety concerns have been the other major hurdle for Pembina, but the company recently submitted a revised report by consultant DNV GL, a Norwegian company that specializes in safety reviews for the world gas and oil industry.
The net result of the modifications is an overall reduction in risk for the facility, reported Eric Dyck, Pembinas local project manager, in a new report to the Planning and Sustainability Commission.
DNVs updated review, called a Quantitative Risk Analysis, earlier calculated that the operation could result in one death in 38 years, and that would likely affect workers on site and not neighbors in North Portland.
The new review says that was overstated.
The total potential loss of life is now equivalent to one statistical fatality every 180 years, Dyck reported.
Due to concerns about the safety of neighbors on Hayden Island and Marine Drive, Pembina asked DNV to separate out risks for its own work force and the nearby population. DNV projected one statistical fatality for every 240 years for onsite workers and one statistical fatality every 670 years for the offsite population.
Driving a car would be more dangerous than the propane terminal, at that rate.
A team of neighbors who authored a white paper on safety risks raised the specter of a Boiling Liquid Expanding Vapor Explosion, or BLEVE, in which an explosion in one rail car or refrigerated propane tank sends shrapnel at rapid speeds, setting off a domino-like series of explosions.
DNV supplied more data about that, saying shrapnel could travel as far as 0.7 miles from the site. Thats about half as far as the nearest homes at Class Harbor, a floating home community off North Marine Drive.
The city hired an independent engineering consultant, Clackamas-based Akana, to review the Norwegian companys Quantitative Risk Analysis, or QRA.
Akana reviewed propane spills or releases over the last five years at nine comparable domestic propane terminals. There were no releases at seven of the terminals, and releases at the other two terminals did not seem to raise any cautionary red flags.
Overall, Akana said the Norwegian companys report was fair. The Pembina Portland Propane Terminal QRA is generally a thorough and realistic evaluation of the potential risks and consequences that can be expected due to the operation of the proposed terminal, it concluded.
At a March public hearing when the first safety review was revealed, residents questioned why it didnt include the risk of injuries. In the revised analysis, DNV included a map showing the odds of injuries to neighbors.
DNVs conclusion: the odds of an injury to the nearest residents are about one in every 10 million years.
Some neighbors have praised Pembinas safety record and approach, and are now focusing on the hazards of shipping the propane by rail from Alberta, including through the Columbia River Gorge, and then shipping it over the Columbia River all the way to China and other Asian markets.
The real issue is the trains with the propane in them; thats way, way up on the top of the list, said Chris Fountain, a Class Harbor resident.
Pembina has said it will use modern rail cars, but relies on rail carriers to assure the safety of its deliveries.
Fountain and other neighbors point out that Pembina will only have possession of the propane for a small percentage of the time.
Amid all the furor about Pembinas safety features and the carbon footprint of Portland serving as a transshipment point for fossil fuels, its easy to forget that all Pembina requires at this point is a simple zone change, allowing it to transfer the propane over a short pipeline to get it from storage tanks at the Port of Portlands Terminal 6 onto a waiting ship moored in the slough south of West Hayden Island.
City planners have raised no objections to that idea, and Akana concurred. The QRA does not provide a basis for rejection of that zone change, Akana wrote, because it calculated the odds of leaks from the pipeline would be one every 1,923 years.
If the Planning and Sustainability Commission approves the project, the issue would go to the Portland City Council for final review.
However, John Talberth, president of the West Linn-based Center for Sustainable Economy, argues the city lacks the jurisdiction to approve the propane terminal, because that properly falls to the state Energy Facility Siting Council.
Armstrong said thats a separate issue, and the city is only considering a zone change right now.
But Talberth says if the City Council approves the project, hell keep fighting, appealing it to the state Land Use Board of Appeals.
The Portland Planning and Sustainability Commission will conduct a public hearing on the Pembina project starting at 3 p.m. Tuesday, April 7, and then render a decision. It has allowed five hours for the issue. The gathering is at 1900 S.W. Fourth Ave., on the second floor.