March , 2014

Port of Portland Statement Regarding Crude Oil by Rail

Over the course oI the last year, the Port oI Portland has received numerous inquiries about our interest
and capability to host Iacilities related to the storage and/or transIer oI U.S.- and Canadian-produced
crude oil arriving by rail. Interest in Port oI Portland Iacilities is understandable given the Port's
considerable property ownership at the nexus oI two transcontinental railroads and a deep-water
navigation channel.
The sudden and remarkable transIormation oI North American oil production, derived Irom shale and oil
sands, is driving much oI this new activity. Oil production Irom the Bakken, as an example, has grown
Irom 120,000 barrels per day in 2008 to more than one million barrels per day in 2013. Canadian oil
imports to the U.S. have increased 57 percent over the last decade replacing imported oil Irom Mexico
and Venezuela.
There are many beneIits Irom this energy market transIormation. Most importantly, eliminating
dependence on Ioreign oil Irom countries that are unIriendly to the United States has signiIicant and
positive geo-political implications. A reduction in U.S. balance oI payments, mitigation oI the need to
send American soldiers to deIend national energy interests, as well as the obvious economic beneIits oI
the U.S. acting as a global stabilizing Iorce in the price oI energy are all tangible examples oI how North
American energy production is a game-changer.
Domestic energy-intensive industries like steel and aluminum manuIacturing and metal Iabrication now
have a global economic advantage due to lower energy input costs. No doubt, other U.S. manuIacturing
sectors will derive long term advantages due to dependable sources oI low-cost natural gas, all derivatives
Irom the oil production transIormation now taking place. All oI these energy developments are sure to
oIIer considerable beneIits Ior the United States and Ior Oregon.
Transport oI crude oil by rail is key to this discussion because the U.S. reIining capacity was historically
developed to receive crude by ocean-going vessels. Transport capacity Irom production regions to
reIineries via pipeline is seriously constrained or non-existent, creating both demand and opportunity Ior
large quantities oI crude oil to move by rail.
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Port oI Portland Statement Regarding Crude Oil by Rail
March , 2014
Page 2 oI 2
At the same time, there are concerns regarding the saIe transportation oI crude oil by rail. Since 2008,
there have been approximately 10 derailments. There have also been several recent events, particularly
involving the transport oI light Bakken crude oil in rail cars, which represent considerable cause Ior
concern triggering a close examination oI the transportation network. However, we note with interest the
recent aIIirmative steps by the major North American railroads to begin addressing some oI these issues,
including lowering train speed, a call Ior saIer train cars, increases in track inspections and increases in
emergency response training.
Many in our community and elsewhere around the country might take the position that transportation oI
any carbon whose ultimate use is Ior combustion is undesirable because oI the cumulative impacts such
combustion may have on the climate. National and local discussion on carbon-based Iuel use is
sometimes simpliIied to an opposition to any use due to concerns over greenhouse gas emissions. We
believe the subject is more complex than that Ior a couple oI reasons:
1) The single most signiIicant Iactor in the reduction in the growth oI greenhouse gases over the last Iew
years in the U.S. has been the substitution oI natural gas as a replacement Ior coal.
2) The U.S. economy and our daily use oI various Iossil-Iuel-based transportation modes such as
automobiles, trains, buses and airplanes require a balanced approach to powering America while
continuing to improve environmental conditions.
Thus, the Port believes that we must continue to look at the entire supply chain Ior energy on which we
remain so dependent. Many eIIorts are underway to reduce that dependence and they are commendable
but the achievements in terms oI overall consumption remains Iairly modest.
The Port is interested in being part oI an American energy renaissance brought on by this remarkable
domestic oil transIormation. However, we do not believe that we have sufficient answers to the
important questions regarding environmental and physical safety to proceed with any type of
development at this time.
We, like the rest oI those monitoring this energy transIormationwhich includes our state, city, and local
communitiesare Iollowing developments with interest and, where appropriate, will engage with policy
makers, our community, and the transportation industry to ensure that the important issues surrounding
the saIe and secure transportation oI these products are Iully addressed.
Our interest will begin to grow once we have the conIidence that transportation oI crude oil by rail
continues to meet all state, Iederal and local transportation rules and regulations and exhibits a suIIicient
accident-Iree record Ior a sustained period oI time.
The Port oI Portland's mission is to enhance the region's economy and quality oI liIe by providing
eIIicient cargo and air passenger access to national and global markets. In support oI this mission, we are
closely monitoring developments in the crude-oil-by-rail market and will continue to stay inIormed about
the steps the rail industry and others are taking to provide Ior the saIe and eIIicient transportation oI
crude-oil. This will ensure that the planning Ior Iacilities that accommodate such cargoes can be
developed with appropriate saIety, regulatory and environmental protection standards.