Shell Suspends Pacific Northwest Crude-By-Rail Project

Royal Dutch Shell plc announced Thursday that it is suspending permitting of its planned crude-by-rail project at its Puget Sound Refinery, which is located near Anacortes, Washington.

"When we look at current crude oil supplies, prices and markets globally, and the cost of the project, it just doesn't make economic sense to move forward at this time," said Shirley Yap, general manager of the 145,000-barrel per day refinery in a Shell press release. "We are committed to investing in this facility and there will be other ways to do that."

Currently, the refinery receives Alaska North Slope crude oil via oceangoing vessels that unload at its dock as well as a pipeline linking the facility to Canadian oil fields, Shell stated. The refinery's East Gate Rail Project would have diversified the facility's feedstock sources by enabling up to six unit trains per week carrying crude from the U.S. Midwest – particularly the Bakken shale formation in North Dakota – to offload at the site. Each 102-car unit train, laden with approximately 60,000 to 70,000 barrels of crude oil, would have accessed the facility via a new rail spur from the adjacent Burlington Northern Santa Fe (BNSF) mainline, according to the Skagit County, Wash., website.

According to Shell, whose Equilon Enterprises, LLC unit would have built and operated the rail unloading facility, sourcing crude from locations other than the Midwest – where production has decreased – has become a more viable option.

"We are confident with current crudes now available that we can continue supplying the refinery," Yap noted in the press release.

Thursday's announcement followed the Oct. 4 release of the project's draft Environmental Impact Statement (EIS) for public review by Skagit County and the Washington Department of Ecology. The draft EIS contains a number of conditions, and Shell indicated that – at least from a preliminary standpoint – the proposed conditions "would be achievable and feasible." Moreover, the company stated it "remains confident that the project could be built and operated in a way that protects our employees, our community and the environment."

Shell's suspension of the East Gate project is the latest in a string of recent crude-by-rail setbacks on the West Coast. On Oct. 5, the San Luis Obispo County Planning Commission in California denied a Phillips 66 rail spur extension project at its Santa Maria refinery. Moreover, the Benicia, Calif., city council last month voted to deny a permit request from Valero Energy for a crude-by-rail project at the company's Benicia refinery. However, an attorney for Texas-based Valero contends the manner in which Benicia council members rendered their decision broke state and federal law, according to the San Antonio Express-News website.

Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at


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