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Calpine Interest In LNG Development Unwavering, Spokesman Says

Despite the deluge of financial and legal pressures clouding Calpine Corp.'s future, the nation's largest merchant electric generation plant operator is still actively pursuing development of a liquefied natural gas (LNG) receiving terminal in Oregon at the mouth of the Columbia River along the Pacific Coast.

The company will soon be the first in Oregon to have its local permitting completed and Calpine expects to parlay that into making a formal filing on its Skipanon LNG receiving terminal to the Federal Energy Regulatory Commission (FERC) during the first half of next year. Ultimately, Calpine also wants to land a partner -- preferably with ties to some large natural gas supplies somewhere in the Pacific Rim -- for the LNG terminal, which is currently envisioned as a 1 Bcf/d facility.

"We're still moving forward with it, and we're pretty close to wrapping up the local [land-use] permitting process [with the city of Warrenton, OR] and hoping to continue with it," said Kent Robertson, a Calpine spokesperson, who reiterated that the company is still looking for a partner on the project. Is an announcement on that close at hand? "I don't think so, although you never know when everything might come together."

LNG carries a strategic focus for a company with almost 27,000 MW in mostly gas-fired power plants spread across 21 states. By virtue of its huge bet on gas-fired, combined-cycle generating plants a decade ago, Calpine today is the nation's single biggest buyer and user of natural gas.

"We're talking about a LNG project with a billion cubic feet per day sendout capacity, so we're talking about a significant project," Robertson said. That is why he underscored the fact that Calpine is looking at LNG development from a "customer's perspective, as opposed to a supplier's perspective," meaning it wants a partner that is both large and well tied to the natural gas exploration/production and supply sectors.

"Calpine has a considerable demand for natural gas, so we're bringing one side of the equation to [the] table," Robertson said. "In looking for a partner, we need someone who brings the other side of the equation."

At least two other competing LNG proposals in Oregon are still active, but Calpine will be the first to complete the local process, Robertson said. The continuing activity is testament to the fact that the "market fundamentals are clearly in place" for LNG in the Pacific Northwest, he said.

"The fact that none of the other projects have fallen out [this] year is evidence to the market interest," he said.

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