(Houston - May 29, 2008) Plains All American Pipeline, L.P. (NYSE:PAA) announced today that the Port of Los Angeles ("POLA") and the U.S. Army Corps of Engineers ("USACE") have jointly released the Draft Environmental Impact Report ("DEIR") and the Draft Environmental Impact Statement ("DEIS") for its proposed Pier 400, Berth 408 petroleum terminal project ("Pier 400").
"Plains All American is pleased that the DEIR/DEIS has been released and we believe our Pier 400 project will be a positive addition to the port and an important and timely infrastructure addition to support the Los Angeles area economy," said David Wright, Vice President of Plains All American and Pier 400 Project Manager. "We believe that the Pier 400 project meets the letter and spirit of the POLA/Port of Long Beach ("POLB") landmark Clean Air Action Plan and is designed to be one of the most environmentally responsible projects of its kind in the world."
"The issuance of the DEIR/DEIS is a major milestone in the development of Pier 400," said Greg L. Armstrong, Chairman and CEO of Plains All American. "We would like to thank all of the federal, state and local agencies that have worked so diligently and cooperatively with us during the process and we look forward to continued cooperation as we move into the next stages of project development. We strongly believe that Pier 400 will help to address the critical energy infrastructure needs of California in an environmentally responsible way well into the future."
Pier 400 Project
The project, which will be designed and constructed by PAA's subsidiary, Pacific L.A. Marine Terminal LLC, involves the construction of a new deep-water bulk petroleum import terminal at Pier 400 and Terminal Island in the POLA to handle marine receipts of crude oil and refinery feedstocks. As currently contemplated, the facility would have an initial throughput capacity of 350,000 barrels per day and is intended to accommodate the growth of crude oil import demand for the foreseeable future. The facility will also include four million barrels of storage capacity along with high-capacity transfer pipelines and other infrastructure to distribute the crude oil imports to area refineries. The current cost estimate for PAA's portion of the project, which includes the "land-side" facilities, is approximately $468 million.
A deep-water petroleum import facility such as Pier 400 is already included in the POLA master plan and the harbor was previously dredged to accommodate deep-draft oil tankers. The POLA will also be making an investment in certain "water-side" improvements, such as a jetty, wharf, alternative marine power facilities and other related items.
Regional Oil Supplies Dwindling & Import Capacity Limited
In addition to accessing crude oil feedstocks from indigenous California production, refineries in the Los Angeles basin have also relied upon waterborne transfers from Alaska, with the balance provided by waterborne foreign imports. As production from both California and Alaska has steadily declined, the Southern California refineries have become more reliant on foreign crude imports, which have longer transport times and are delivered by larger transport vessels, requiring deeper ports and more significant dock facilities.
A steady rise in crude oil demand has compounded the increased demands on California's import facilities. According to a mid-2007 study prepared by Baker and O'Brien Inc., the consumption of crude oil by California refineries is projected to increase from approximately 1.9 million barrels per day in 2007 to 2.3 million barrels per day in 2021. Due to declining California production, during this same time period, California's reliance on waterborne deliveries of crude oil is projected to increase by over 700,000 barrels per day, including an increase of over 460,000 barrels per day in Southern California.
According to a March 2008 report by the Los Angeles County Economic Development Corporation, the capacity provided by the Pier 400 project is critical to meeting Southern California's need for increased waterborne foreign imports. Import capacity at the San Pedro Bay ports has declined over the past 30 years as facilities have been taken out of service, and existing crude oil terminals in California are limited as to the size of vessels that they can receive. PAA believes that upon completion, Pier 400 will be the only facility on the West Coast of the United States capable of accommodating a fully laden very large crude carrier (VLCC) class of tanker – a vessel that plays an important role in the global distribution of crude oil.
Environmental Leadership
The Pier 400 project will be one of the first projects designed to meet the goals and objectives of the POLA/POLB Clean Air Action Plan, which identified items necessary to improve overall air quality in the harbor area. Among the emissions-reducing measures being incorporated into the Pier 400 project are:
- Phased-in usage by vessels of low-sulfur fuels and alternative marine power (also referred to as "cold ironing");
- Slow steaming within 40 nautical miles of the port;
- Storage tanks equipped with the best available control technology;
- Electric-powered shore-side pumps to minimize the use of vessel pumps and reduce fuel usage and emissions;
- High-capacity pumps and large-diameter pipelines, which enable maximum offloading rates and minimize the time vessels remain in port;
- The ability to accommodate much larger vessels resulting in a more efficient facility, which will require fewer vessels to receive the same volume of crude oil; and
- The dock and shoreside facilities will comply with South Coast Air Quality Management District New Source Review permitting standards that require the facility to offset 120% of operational related emissions through the purchase of Emission Reduction Credits and to operate subject to emissions caps.
In addition to these and other emissions-related measures, the facility is designed to comply with stringent regulatory requirements for engineering and construction, safety and security. Further, Pier 400 is expected to attract some of the most efficient oil transport ships, which could replace older, smaller and less efficient vessels that produce a higher rate of air emissions for the same amount of oil delivered.
Remaining Approvals
Several additional approvals must be obtained before construction of the project can commence. The public comment period related to the DEIR/DEIS will extend for at least 60 days after which a final EIR/EIS will be developed by the respective state and federal agencies. After the final EIR/EIS is approved by the POLA Board of Harbor Commissioners and the USACE, approval of a long-term commercial agreement must be obtained from the Los Angeles City Council in addition to the receipt of other administrative permits.
Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. Through its 50% equity ownership in PAA/Vulcan Gas Storage, LLC, the Partnership is also engaged in the development and operation of natural gas storage facilities. The Partnership is headquartered in Houston, Texas.
Forward-Looking Statements
Except for the historical information contained herein, the matters discussed in this news release (including the expected timing, cost, benefits and impact of the Pier 400 project) are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward-looking statements. These risks and uncertainties include, among other things: disruption of foreign crude oil production or transportation; fluctuations in refinery capacity in areas supplied by our mainlines and other factors affecting demand for various grades of crude oil and refined products and resulting changes in pricing conditions or transportation throughput requirements; shortages or cost increases of power supplies, materials or labor; weather interference with business operations or project construction; the impact of current and future laws, rulings, governmental regulations and interpretations; our access to capital and our ability to obtain debt or equity financing on satisfactory terms; general economic, market or business conditions; and other factors and uncertainties inherent in the transportation, storage and terminalling of crude oil and refined products discussed in the Partnership's filings with the Securities and Exchange Commission.
Contacts:
Media Contact
Vice President
Dave Wright, 562-728-2821
or
Investor Contact
Manager, Investor Relations
Roy Lamoreaux, 713-646-4222 – 800-564-3036
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