Shell Puget Sound Refinery

A view of the Shell Puget Sound Refinery from across Padilla Bay.

ANACORTES — Shell Puget Sound Refinery announced Thursday that it is no longer pursuing the rail unloading facility it has worked toward for several years, much to the surprise of government agencies reviewing the project and groups opposed to it.

The announcement came two days after Skagit County Planning and Development Services and the state Department of Ecology released a draft environmental impact statement, or EIS.

"We were really surprised," Skagit County Planning Director Dale Pernula said after being notified Thursday afternoon of Shell's decision. "They've been working so hard and we've been working so diligently on this. It just really surprised us."

Over the past nine months the county and Ecology worked together on the draft EIS under the state environmental policy act. The act requires any project that may have environmental impacts be thoroughly evaluated so that the impacts can be avoided or reduced through mitigation if possible.

The draft EIS concluded that other than increasing the risk of an oil train accident that could result in a spill, fire or explosion, the majority of environmental impacts the rail unloading facility would have had could be addressed in the required construction permits, or reduced through mitigation projects.

When it comes to train accidents, which have been the subject of local protests in recent years, the draft EIS stated: "The proposed project would result in an increased probability of rail accidents that could result in a release of oil to the environment and a subsequent fire or explosion" that "could have unavoidable significant impacts."

Environment groups that have been tracking the rail facility proposal were thrilled with Shell's decision to halt the project.

"This is a victory for the 800,000 plus people in Washington state that aren't going to be put at risk by these additional oil trains traveling through the blast zone," Stand.Earth field director Alex Ramel said.

Stand.Earth is one of several environment groups that fought for an EIS to be required for the project, have protested it and recently formed the campaign "Protect Skagit: Stop Oil Trains" to help community members write comments in response to the draft EIS. 

Refinery officials said Shell's decision was based purely on economic factors. The only connection to the draft environmental impact statement, they said, was that it was a good milestone at which to make the announcement.

Refinery general manager Shirley Yap said when Shell started pursuing a rail facility, the price of Bakken crude oil was advantageous compared to other sources.

The price for Bakken crude has since increased, making the oil — and the project aimed at transporting it by train to the March Point refinery — less economically attractive.

"At today's prices even if I had a (rail) facility, I would not be buying Bakken," Yap said.

As for the draft EIS, Yap and refinery spokesman Cory Ertel said they felt its suggestions for mitigating environmental impacts were achievable.

Yap said she is confident the refinery could still build an environmentally friendly, safe rail unloading facility following the guidelines in the draft EIS if the refinery decides to pursue the facility in the future. But there are no plans to do so.

Crina Hoyer, executive director of the nonprofit RE Sources for Sustainable Communities, said it was upsetting to her that Shell would invest in something "economically volatile."

"These projects are opportunistic ... fossil fuel companies are just racing to take advantage of the next big opportunity for profit and not thinking about the community," she said.

Ecology spokesman Larry Altose said the comment period and public hearings for the draft EIS will be canceled.

"We are preparing to cease our joint work with the county," he said.

If Shell decides in the future to pursue a rail unloading facility, the EIS process will have to start over, Altose said. As an unfinished document, the draft EIS could only be used as a source of information.

Stand.Earth's Ramel said he will be watching closely to make sure the refinery follows through and withdraws the permits that set the EIS process in motion.

As of Thursday, the permits filed with Skagit County had not been withdrawn, Pernula said.

"We will work with the applicant to properly close out the project," he said.

The refinery will continue receiving crude oil from Alaska's North Slope by ship and from Canada by pipeline. The refinery will also examine other potential sources of crude oil.

"There will be other opportunities for us to invest in. This just isn't a good investment at this time anymore," Ertel said.

Both Yap and Ertel noted that Shell Puget Sound Refinery remains one of the company's most successful refineries.

A Shell news release states that the March Point refinery produces about 25 percent of the Pacific Northwest's fuel and employs about 700.

— Reporter Kimberly Cauvel: 360-416-2199, kcauvel@skagitpublishing.com, Twitter: @Kimberly_SVH, Facebook.com/bykimberlycauvel

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