Tesoro Corporation and Savage Companies have formed a joint venture to develop and operate a new 120,000 barrel-per-day (bpd) crude-by-rail unloading and marine loading facility at the Port of Vancouver WA, subject to approval by regulatory agencies and Port Commissioners. Tesoro’s side of the agreement will be handled by its Tesoro Refining & Marketing Company LLC subsidiary.

With access to rail and existing marine infrastructure, the Port of Vancouver is uniquely positioned to serve as a hub for the distribution of North American crude oil to West Coast refining centers. Tesoro and Savage officials say their companies are ideal partners for this project, having already operated in close partnership for almost 10 years on the West Coast. The Tesoro-Savage Joint Venture’s combined capabilities, experience and resources are expected to create substantial benefits for the Port and the Vancouver community in the form of sustainable revenue to the Port and local jobs associated with the facility’s construction and operation.

“This is an exciting project, and we are pleased to be partnering again with Savage,” says Greg Goff, president and chief executive officer of Tesoro. “Building upon the recent success of the rail unloading facility at our Anacortes WA refinery, where we have been delivering Mid-Continent crude oil via unit train in an environmentally sound and cost-effective manner, this project is the ideal next step for Tesoro as we drive additional feedstock cost advantage to the remaining refineries in our West Coast system.”

Kirk Aubry, president and chief operating officer of Savage, adds: “We are looking forward to bringing crude oil destination services to the Port of Vancouver. This partnership solidifies Savage’s position as a leading provider of services in the crude-by-rail market to refiners, producers and marketers. More importantly, our collaboration with Tesoro will ensure that the facility is safe, productive and environmentally responsible.”

Port of Vancouver officials welcome the announced joint venture. “The Tesoro-Savage Joint Venture is an ideal fit for what’s necessary to execute this project,” says Todd Coleman, chief executive officer of the Port of Vancouver. “This project aligns with our strategic goals and our mission to provide economic benefits to our community through leadership, stewardship and partnership in marine and industrial development. The Port will benefit from Tesoro’s and Savage’s shared expertise, and we look forward to working with them to help support the local economy by further diversifying our cargo handling capabilities.”

The Tesoro-Savage Joint Venture will own the crude unloading and marine loading facilities and will enter into a land lease agreement with the port for an initial period of 10 years. Savage will oversee and manage the design, construction, and operation of the facility on the Joint Venture’s behalf. The facility is expected to be operational in 2014 and will represent an investment of approximately $75 to $100 million, and will be designed to handle an estimated initial volume of 120,000 bpd with potential near-term expansion capability to 280,000 bpd.