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Tesoro places its bet on a new, West Coast oil terminal

Even as U.S. crude prices remain stuck below $50 a barrel, one energy company is betting big on an oil project that could transform energy infrastructure on the West Coast.

Tesoro is looking to develop a 42-acre site at Washington's Port of Vancouver into one of the largest crude-by-rail facilities in the country. Through a joint venture with logistics firm Savage Cos., the $210 million Vancouver Energy terminal would receive up to four "unit" trains transporting 100 to 120 cars filled with oil per day.

"It's been an active port for more than 100 years, and what we're proposing to build here is a crude-by-rail transfer facility to be able to bring North American crude to the West Coast refineries," said Keith Casey, executive vice president of operations at Tesoro, standing in Vancouver Energy's gravel lot at the industrial port.

If approved, the Vancouver Energy terminal would receive up to 360,000 barrels of domestic crude daily, arriving on trains run by Berkshire Hathaway's BNSF Railway. The trains would be drained; the oil would stored in above-ground tanks on the property, then loaded onto Panamax tanker ships. The 300,000-barrel Jones Act-compliant American tankers would then make the journey down the Columbia River and out to refineries along the coast.

Tesoro would claim the first 60,000 barrels for its own refineries in Washington and California; the remaining 300,000 barrels of capacity would be commercially viable, meaning other energy companies could pay to utilize the facility, which will be operated by Savage.

The lion's share of oil would come from the Bakken shale formation in North Dakota and Montana, an area where crude is regularly loaded onto trains. While much of that formation's crude has made its way to East Coast refineries, West Coast demand has picked up over the past several years as refiners look to access more domestic supply that's priced lower than the international benchmark Brent crude and of a relatively a higher quality.

The project sheds light on a much larger issue affecting the region's refiners: a lack of infrastructure, which has kept them from participating in the U.S. energy boom.

"It's incredibly important to the West Coast, because we don't have pipeline access. We have no other...