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Old Kaiser aluminum smelter site may become petroleum storage facility

Post by John Gillie / The News Tribune on Jan. 14, 2013 at 2:48 pm |
January 14, 2013 4:06 pm

The former Tacoma Tideflats site of a World War II-vintage aluminum smelter may become the location of a new petroleum products storage facility if Tacoma port commissioners approve a proposed lease Thursday.

The new 80-acre facility would create 100 temporary jobs during its construction and an estimated 50 permanent jobs once the storage terminal opens in May of next year.

The terminal would be constructed and operated by Targa Sound Terminal LLC, a company that already operates a petroleum and biofuels facility on the east side Tideflats’ Hylebos Waterway and a railcar receiving yard on west side of the waterway.

The new facility would include numerous storage tanks, a multi-track rail yard and facilities at the port’s East Blair Wharf where petroleum products could be loaded and unloaded to barges and ships.

Troy Goodman, Targa president, said the new facility will allow Targa to grow with local demand.

“I’m excited about being able to expand and give back to the community,” he said.

The construction of two mile-long rail tracks leading to the new terminal will allow the facility to receive and unload long trains of tank cars loaded with crude oil from the northern Great Plains. That area in North Dakota and Eastern Montana is the center of booming new oil production created by new production frackturing techniques that free up oil deposits deep underground.

The lease will be the culmination of decade of effort by the port to find a new use for the old Kaiser Aluminum smelter site just north of Highway 509. The port purchased the Kaiser site in 2003 and spent the next several years demolishing the old smelter, its 500-foot smoke stack and its 70 buildings.

The successful repurposing of the smelter property will meet the objectives of the port’s 2012 strategic plan which calls for the port to diversify the uses of its properties beyond the creation of new container terminals.

The new terminal will generate new wharfage fees for the port’s East Blair Wharf.

The petroleum terminal company is expected to invest some $80 to $150 million in the former smelter property.

Targa will generate an estimated $8.6 million in annual revenue for the port in lease fees and other charges. The port spent a total of $24 million buying and clearing the smelter property for reuse. It spent $44 million constructing the 1,200-foot East Blair Wharf.

Targa will have preferential use of the East Blair Wharf, but the port will be able to use the on-water facilities to load and other materials when Targa is not using it.

The Kaiser property has had several interim uses including auto storage, stockpiling gravel, recycling building materials and staging trucks and containers.

The petroleum storage facility will be surrounded by a containment berm that will keep any spilled oil from spreading to the surrounding area and the waterway.

The Targa facility isn’t the only oil storage facility being developed or expanded on the Tideflats. U.S. Oil and Refining in recent months has added rail tracks and new storage tanks to its refinery on the west side of the Blair Waterway.

Major refineries in northern Washington have added rail yards to handle lengthy oil unit trains bringing crude from North Dakota.

In a memorandum to the port commission, John Wolfe, the port’s chief executive officer, said the port’s timing with development of the Kaiser site is right.

“The port believes it has found the right company at the right time,” Wolfe said. “Targa Sound is a locally grown company and a well-known clean energy provider that shares the port’s environmental stewardship and community values. Importantly, Targa Sound is well-positioned in an industry with significant growth potential.”

Targa formerly was known as Sound Refining before its purchase by Houston-based energy firm Targa Resources. The Targa Sound Terminal has 758,000 barrels of existing storage capacity. It stores refined petroleum products, liquified petroleum gases. biofuels, and biodiesel.

The intiial lease will include a three-month feasibility period, a construction period and a 25-year lease period. Targa may terminal the lease for any reason during the feasiblity period.

The company will pay the port reduced rent during the feasibility and construction periods.

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