A major oil logistics company has quietly withdrawn plans to build a $500 million oil tanker terminal at the Port of Los Angeles, citing changing industry economics.
Houston-based Plains All American Pipeline had planned to construct a new berth for large oil tankers. Oil was to be offloaded and sent through a newly built pipeline into nearby storage tanks. Port officials approved the project in 2008 and were notified about the company's changing plan earlier this month, port spokesman Phillip Sanfield said. The project began in 2003.
The Port of Los Angeles and Plains All American had split the $3 million cost of an environmental impact report, but the port will not be repaid for its share, Sanfield said.
Plains All American officials did not return phone calls. But in a release posted on its website, the company cited a handful of reasons for the change, including project delays, the economic downturn, permitting hurdles and a shift toward increased domestic oil production.
William Wei-Choun Yu, an economist with the Anderson Forecast at UCLA's Anderson School of Management, said the company likely made a rational business decision. Yu said oil demand in the United States is down roughly 12 percent since 2007, and he noted that the United States is obtaining more domestic oil and more oil from Canada and Mexico, making more supertankers unnecessary.
"I am not surprised at all that they decided to cancel this kind of project," Yu said.
Sanfield said port officials were surprised when the company notified them of the change.
"They didn't given us any more details than the variety of business reasons they outlined on their website," Sanfield said. "The port will be looking at (filling) that site in the months to come."
Some community activists had expressed concern that the new oil tankers would have increased pollution because the large ships generally must run their engines even when they're in port. Typical container ships can hook up to shore-side electricity.
"We can all breathe more easily for now because up to 200 supertankers a year are not pulling into our harbor and unloading while running their engines 24 hours a day," said Peter Warren, chairman of the Port and Environment Committee of the Coastal San Pedro Neighborhood Council.
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