Author: Antonio Machado, Director, Northwest Technical

Assessing the Operational Assumptions Behind the Proposed 20% Storage Reduction

WSPA reviewed the updated Parametrix fuel-demand analysis, the ECOnorthwest economic assessment and the City of Portland’s revised analysis incorporating the Port of Portland’s jet-fuel forecast. These studies provide insight into Oregon’s potential long-term fuel demand. However, projecting future fuel consumption is not the same as determining how much working storage capacity the Critical Energy Infrastructure (CEI) Hub needs to operate safely and reliably.

The distinction is important. The studies acknowledge limitations in the operational information available for the CEI Hub, including pipeline flows, marine deliveries, terminal logistics, fuel-specific storage requirements and seasonal demand. These are fundamental considerations when evaluating whether the system can maintain reliable fuel supply with less storage.

WSPA’s review has identified several areas that need additional operational analysis before the modeling can support a specific 20% reduction in working storage capacity. The central question is whether the remaining infrastructure can reliably receive, store and distribute the fuels the state will continue to depend on, not simply whether Oregon may need less fuel in the future.

Modeling Fuel Demand Is Not the Same as Modeling Hub Operations

The Parametrix analysis acknowledges it lacks the information needed to model detailed fuel flows through the CEI Hub. Important operating data, including pipeline movements, transloading capacity and other logistical constraints, remain incomplete. As a result, the model relies on historical aggregate Hub performance to estimate future handling capacity.

This approach does not fully represent how the Hub operates. Fuel movements depend on scheduled pipeline batches, marine deliveries, tank availability, transfer rates, loading-rack capacity, inventory requirements and terminal coordination. These factors all impact whether fuel can move through the system when it is needed. A terminal may have sufficient annual throughput capacity but still face operating constraints when a pipeline delivery arrives and the receiving tanks lack available space. Likewise, a terminal may have adequate inventory on an annual basis but insufficient flexibility to manage unexpected demand or delayed deliveries.

These operating conditions cannot be fully evaluated through annual fuel volumes alone. Without terminal-level information on receipts, transfers, inventories and scheduling constraints, the model cannot establish how the CEI Hub would perform after a 20% reduction in capacity.

Total Storage Capacity Does Not Equal Available Working Capacity

The City’s analysis evaluates storage primarily at an aggregate level. However, storage capacity is not interchangeable across fuels, tanks or terminal operators. Gasoline, diesel, jet fuel, ethanol, biodiesel and renewable diesel have different storage and handling requirements. Some products require dedicated tanks or physical segregation, while others depend on specific pipeline connections, transfer equipment and distribution infrastructure. Capacity available at one terminal may not be accessible to another. A tank used for one product cannot automatically accommodate a different fuel.

This distinction matters when interpreting the model’s projected utilization rates. A result showing 30% unused capacity across the Hub does not mean that every tank or terminal has 30% available capacity. The relevant measure is usable working capacity: the volume that can actually support fuel receipts, storage and distribution under operating conditions. Determining that capacity requires an evaluation of individual tanks, product requirements, infrastructure connections and terminal operating limits.

Simply put, aggregate tank volume alone cannot establish how much physical storage can be removed without affecting the Hub’s ability to manage individual fuel streams.

Tank Turnover Assumptions Are Critical to the Results

The updated Parametrix analysis estimates that the CEI Hub achieved an average of 10.6 annual tank turns in 2023 and uses 12 turns per year as a reasonably achievable operating assumption. Tank turns measure how often the volume of fuel stored in a tank is replaced over a given period. Higher turnover allows a smaller amount of storage to handle more fuel during the year, provided that deliveries, transfers and distribution can occur at the required pace.

This is a central assumption in the proposed storage reduction. The less working capacity available, the more frequently the remaining tanks must receive and release fuel to maintain the same throughput. Parametrix acknowledges that 12 annual turns appears reasonable but that the available benchmarking information is not definitive. The analysis therefore establishes an operating assumption, not a demonstrated CEI-specific performance standard.

Actual tank turnover depends on delivery schedules, product demand, terminal configuration and the ability to maintain sufficient inventory between shipments. A system may achieve higher turnover during favorable conditions without being able to sustain that rate during seasonal peaks, refinery maintenance, pipeline interruptions or delayed marine deliveries. Before using 12 annual turns to support a permanent reduction in storage, the City must consider actual turnover and inventory dwell-time data by product and terminal, including how those rates change under more demanding operating conditions.

Storage Utilization Changes Significantly With Turnover Assumptions

The City’s revised jet-fuel analysis illustrates how strongly projected storage utilization depends on how long fuel remains in storage. For 2035, the model produces substantially different utilization results depending on the assumed storage period:

• Approximately one month in storage: 70% utilization.
• A modest reduction in storage time: approximately 65% utilization.
• Three weeks in storage: approximately 49% utilization.

Fuel demand remains unchanged across these examples. The difference comes from how quickly the model assumes that fuel can move through the available tanks. This has direct implications for the proposed storage reduction. As the assumed turnover rate increases, the model identifies more available capacity, even though the physical infrastructure and projected demand remain the same. In practice, faster turnover requires sufficient incoming supply, receiving capacity, transportation availability and coordination across terminal operations. Those conditions cannot always be met, particularly during disruptions.

The sensitivity of the results reinforces the need to validate turnover assumptions against actual CEI Hub operating conditions. Otherwise, projected surplus capacity may depend on operating speeds that do not reflect the full range of conditions the system must accommodate.

Annual Throughput Does Not Establish Supply Reliability

The studies rely primarily on annual fuel demand and annualized tank turnover to estimate future storage requirements. Parametrix acknowledges that the available data do not support a detailed seasonal analysis or fully establish whether capacity constraints could arise during peak periods. Oregon’s fuel system does not operate on annual averages. Gasoline demand rises during the summer travel season, diesel requirements change with seasonal economic activity, and jet-fuel demand responds to aviation schedules and travel patterns. Refinery maintenance, pipeline interruptions, marine delivery delays and severe weather can further affect the timing and availability of supply. The CEI Hub must have sufficient working capacity to manage these conditions, not simply enough theoretical capacity to handle the total gallons consumed over a year.

Reducing storage while relying on higher turnover also increases dependence on uninterrupted fuel deliveries. Under normal conditions, tanks may refill frequently enough to meet demand. During a supply interruption, however, tanks cannot turn faster without incoming product. Fuel availability then depends on the inventory already in storage and how long it can support demand.

This is where working storage provides an essential operational buffer. It allows terminals to manage fluctuations in deliveries and demand while maintaining continuity across the supply chain. A complete reliability assessment should evaluate minimum operating inventories, days of available supply by fuel type, seasonal demand peaks and the performance of the remaining infrastructure during disruptions.

The current annual-throughput modeling provides information about projected fuel movements, but it does not establish whether a 20% reduction would preserve the operational flexibility needed to maintain reliable supply.

The Economic Analysis Does Not Quantify the Impact of Reduced Storage

The ECOnorthwest assessment provides information about Oregon’s economic exposure to higher transportation fuel prices. It evaluates how price increases could affect households, employment and broader economic activity. However, the assessment does not evaluate the likelihood or severity of fuel price increases that could be caused by reducing CEI Hub storage capacity by 20%.

Parametrix identifies a similar limitation, acknowledging that its model cannot determine how changes in tank volume would affect fuel prices in markets supplied by the Hub. This leaves an important gap between the proposed storage reduction and the economic analysis. The studies demonstrate that higher fuel prices can produce economic consequences, but they do not establish the relationship between reduced working storage and potential changes in fuel prices.

To understand whether reducing storage would increase fuel prices, the analysis must examine how a 20% reduction could affect fuel deliveries, terminal operations, transportation costs and fuel availability. The ECOnorthwest study shows how higher fuel prices could affect Oregon’s economy, but it does not establish whether the proposed 20% reduction in CEI Hub storage would cause prices to rise or by how much.

Jet Fuel Highlights the Limits of Aggregate Modeling

The City’s updated jet-fuel analysis provides a clear example of why fuel-specific operating requirements matter. After incorporating the Port of Portland’s higher aviation forecast, projected jet-fuel demand for 2035 increased from approximately 231 million gallons to 329 million gallons, an increase of about 42%. Yet projected utilization across the entire CEI Hub increased only from approximately 68% to 70%. The difference reflects jet fuel’s relatively small share of total Hub storage. However, the modest change in aggregate utilization does not necessarily reflect the operating conditions of the jet-fuel supply system.

According to the City’s analysis, approximately 5% of in-service Hub storage is dedicated to jet fuel. Portland International Airport also receives 100% of its jet fuel through the CEI Hub via dedicated pipeline infrastructure. This creates a distinct operating requirement. Available gasoline or diesel storage elsewhere in the Hub does not automatically provide additional jet-fuel capacity. Jet-fuel supply depends on dedicated storage, compatible handling infrastructure, pipeline capability, delivery schedules and sufficient inventory to meet aviation demand.

The projected 70% utilization rate does not demonstrate that the jet-fuel system has sufficient capacity under all operating conditions. To determine whether projected jet-fuel demand can be accommodated reliably, particularly during peak aviation activity and potential supply interruptions, the City should conduct a fuel-specific assessment.

Establishing the Basis for a 20% Storage Reduction

Under several modeled scenarios in the underlying studies, aggregate fuel demand is projected to decline. However, a forecast of lower fuel demand does not automatically establish that 20% of existing storage capacity can be removed without affecting fuel supply reliability.

The studies identify several unresolved operational considerations, including limitations in terminal-level logistics data, fuel-specific storage requirements, maximum achievable turnover, seasonal demand, supply interruptions and potential pricing effects. These considerations are central to determining how much working capacity the CEI Hub needs. Storage requirements are driven not only by the total volume of fuel moving through the system, but also by the timing of deliveries, product segregation, minimum inventories and the need to maintain flexibility when supply conditions change.

Before the City can justify a specific reduction, additional analysis should establish:

• Usable working storage capacity by fuel type, terminal and tank configuration;
• Demonstrated tank turnover rates and inventory dwell times under normal and peak operating conditions;
• Minimum operating inventories and days of available supply for individual fuel products;
• Pipeline, marine, transfer and distribution constraints affecting replenishment;
• Seasonal demand requirements and performance during supply disruptions; and
• Potential logistical and economic impacts associated with operating the Hub at reduced capacity.

These operating conditions will determine whether the CEI Hub can maintain dependable fuel supply with less storage.

Conclusion: Storage Reductions Must Be Supported by Operational Evidence

WSPA recognizes the value of the City’s work in evaluating long-term fuel demand and identifying potential changes in future CEI Hub utilization. The studies provide an important planning foundation and help inform discussions about Oregon’s evolving transportation fuel needs. However, the available modeling does not fully account for the operational requirements that determine how much working storage the CEI Hub must maintain. Aggregate demand projections and assumed tank turnover rates cannot substitute for an assessment of actual terminal operations, fuel-specific storage needs and supply reliability during periods of disruption.

The proposed 20% reduction has not been demonstrated to preserve the system’s ability to receive, store and distribute fuel under real operating conditions.

Antonio Machado is Director, Northwest Technical at the Western States Petroleum Association, where he leads regulatory efforts involving fuel supply, low-carbon fuels, process safety and marine transportation. A chemist by training, he brings more than 15 years of industry experience, including 12 years at Phillips 66’s Ferndale Refinery, where he advanced from laboratory technician to crude rail superintendent, overseeing field safety and coordinating the movement of crude oil and refined products. In 2016, he envisioned and led a safety strategy that earned the Ferndale Refinery the Golden Shield Award for safety performance. He previously worked as a senior laboratory chemist at Flint Hills Resources and a product blending manager at Flying J, and he holds a bachelor’s degree in chemistry from Brigham Young University.