The Port of Los Angeles is embarking on a programme to update ageing storage tanks, but the expiring leases of marine oil terminal operators may put a spanner in the works.
California State Lands Commission and port officials have agreed to a 30 December deadline for the port to furnish a compliance and construction plan for upgrading marine oil terminals to meet Marine Oil Terminal Engineering and Maintenance Standards (MOTEMS).
MOTEMS rules establish minimum engineering, inspection and maintenance standards for oil terminals in California and are the first such standards to be implemented anywhere in the country.
Five of the seven marine oil terminal operators at the Port of L.A. have leases that are either due to expire in the near future or are month-to-month agreements.
ExxonMobil's lease (Berths 236-240) expires in 2015; NuStar Energy's lease (Berths 163-164) expires in 2014; and Kinder Morgan's lease (Berths 118-120) expires in 2013. Valero (Berth 164) has been operating on a month-to-month holdover lease since 2001, and ConocoPhillips (Berths 148-151) is operating under a similar monthly arrangement with a revocable permit.
The State Lands Commission estimates the cost of MOTEMS compliance at $11 million (8 million) to $12 million per terminal. The port is refining its own estimate, which it expects to be significantly lower than its earlier projection of $50 million per terminal. The port's new estimate is due to be included in its compliance plan.
The known risk of oil spills in the event of an earthquake or tsunami, especially given the age of most terminals are a worry for the port. More than half of the terminals statewide are more than 70 years old, and the Port of L.A. has some of the state's oldest facilities. Six of the seven facilities at the Port of Los Angeles were built between 1919 and 1923. The port's newest terminal, operated by Equilon Enterprises (formerly Shell), dates back to 1938.
Statewide, no terminal subject to MOTEMS has completed all its repairs. To date, all terminals found to have a high or medium risk for a potential spill – including all the facilities at the Port of L.A. – have completed their safety audits. But the lease uncertainty coupled with the age of the infrastructure is unique to the L.A. Port.
Source: The Cunningham Report