Shell's Washington oil-by-rail plan gets streamlined permitting

By Kristen Hays

HOUSTON, Aug 15 (Reuters) - Royal Dutch Shell Plc (Xetra: R6C1.DE - news) 's proposal to move by rail up to 60,000 barrels per day of North American crude to its Washington state refinery will not have to undergo a lengthy environmental review, local planners said this week.

The plan still awaits multiple permit approvals before construction can start, but the Skagit County Planning and Development Services division's decision that a full-fledged environmental review is not required eliminates what could have been a lengthy delay of up to a year.

Shell (LSE: RDSB.L - news) 's project could now start up by early 2015, but the company has not disclosed when.

"Construction timing will depend on when all of the permits are approved. We are still too early in the overall permit process to forecast when we will start construction," Shell spokeswoman Destin Singleton said on Friday.

Shell is the last of the state's refiners to seek approvals to move cheaper U.S. and Canadian oil by train to their plants to replace more expensive imports. Tesoro Corp was the first, starting shipments of up to 50,000 bpd to its 120,000 bpd Anacortes refinery in September 2012. Shell's 145,000 bpd refinery sits right next to the Tesoro plant.

U.S. Oil & Refining and BP Plc (LSE: BP.L - news) followed suit, and Phillips 66 (NYSE: PSX - news) aims to start up its 30,000 bpd rail offloading operation at its 101,000 bpd Ferndale plant in the fourth quarter this year.

Those other projects did not have to undergo full environmental reviews on top of required permitting.

Opponents concerned about crude by rail safety and environmental impacts were unaware of previous projects when they were in the permitting stages. But opponents took notice when Shell initially filed for permits late last year.

Skagit County planners responded by requiring Shell to meet some additional conditions, but the overall environmental impact is not expected to be significant, eliminating the need for a full review, they said in a notice posted on their website.

Those conditions include compliance with the latest U.S. Department of Transportation rail and railcar safety regulations, which are under review; agreement to help local responders with railcar incidents off the refinery site; and state rules regarding noise buffers and distances from great blue heron colonies.

Singleton said Shell would meet all conditions set forth by the county. (Editing by Marguerita Choy)