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FERC OKs Pacific Northwest LNG Project; Doubts Raised

Responding to a mass of concerns by opponents and critics, FERC last Thursday attached 109 safety conditions and mitigation measures to its order approving the first liquefied natural gas (LNG) import terminal and associated sendout pipeline to serve rising natural gas demand in the Pacific Northwest. However, FERC Commissioners said a number of hurdles still would have to be overcome, raising doubts about whether the facilities will ever be built.

By a vote of 4 to 1, with FERC Commissioner Jon Wellinghoff dissenting, the Federal Energy Regulatory Commission issued a certificate for Bradwood Landing LLC's LNG terminal on the Columbia River in Clatsop County, OR, and NorthernStar Energy LLC's proposed 36-mile, 30- and 36-inch diameter pipeline. The agency took this action despite the considerable opposition from local and state officials to the project, which has been pending before FERC for 42 months.

"We find the project, as conditioned by [the] agency, meets our high safety standards and will have only a limited adverse environmental impact," said Chairman Joseph Kelliher. He further noted that the LNG terminal and pipeline were needed to meet rising natural gas demand in the Pacific Northwest. The order approving the project is "based on science and the fact."

Wellinghoff was the lone opponent on the Commission. "My dissent in this case is premised on a number of considerations. First, the evidence contradicts the majority's finding that the Bradwood project is needed to meet the projected energy needs of the Pacific Northwest. Second...there are reasonable alternatives [to the project]...including construction of new domestic natural gas infrastructure and deployment of renewable and distributed energy resources that are abundantly available in the Pacific Northwest," he said.

The alternatives " [would] serve the projected needs of the Pacific Northwest in a more efficient, more reliable [and] more environmentally preferable manner," Wellinghoff said. The "Bradwood project is not in the public interest."

Although a supporter of the LNG terminal, FERC Commissioner Marc Spitzer acknowledged that no LNG facilities have been built over opposition from a local community since 1967. That's because the Coastal Zone Management Act (CZMA) "gives states an effective veto over LNG projects, notwithstanding FERC certification," he said.

"Consequently, LNG opponents could declare victory even after FERC approval if they are assured an LNG terminal will never be built by state withholding of the CZMA concurrence."

Commissioner Philip Moeller, who hails from the Pacific Northwest, also pointed out that while FERC had issued a certificate to Bradwood Landing, it was not a license for the company to begin constructing the facilities. "In our action...it is necessary to first point out what we are not doing: we are not granting final approval for the construction and operation of the Bradwood LNG facility. Approval for construction will only be given once all the applicable conditions are satisfied, some of which are quite extensive. Of the 109 conditions included in the order, 75 require the submission of information prior to construction," he said.

In addition, "various permits from state and federal agencies are still necessary before the project can move forward. If this process is compared to a baseball game, we are in the early innings," Moeller noted.

"I believe the record shows [that] this facility can be operated safely and in the public interest," he said. He further noted that the LNG terminal and associated pipeline are important developments for the Pacific Northwest, which has a "weak gas infrastructure."

With the lack of native gas supplies in the region and dwindling supplies from Canada, "we need gas from every source available and this is one of them," Moeller said.

The Commission denied requests by Oregon Gov. Ted Kulongoski and others requesting that the agency issue a supplemental EIS, calling it unnecessary (see NGI, Feb. 25). FERC also refused requests for a formal evidentiary, trial-type hearing to develop a record on the need and potential impact of the project. "Trial-type hearings are required only where there are material issues of fact that cannot be resolved on the basis of the written record," the agency said.

Calling FERC's action "a significant milestone" and citing a July 15 Portland Oregonian editorial supporting LNG as an energy option for the region, NorthernStar CEO William Garrett pledged to "continue to work with the states of Oregon and Washington to secure necessary state approvals and FERC conditions. As we have always said, we are committed to meeting all applicable local, state and federal standards."

Garrett said the Bradwood LNG terminal sponsors are "confident" they will be able to satisfy all of the conditions in FERC's order "in an expedient manner that would allow us to begin construction in the second half of 2009."

The proposed terminal would be located on a 40-acre site at the former townsite of Bradwood in Clatsop County, which is about 38 miles up the Columbia River -- the main economic artery for the Pacific Northwest. The project would provide up to 1.3 Bcf of natural gas to the region.

The Bradwood Landing project calls for the construction of a single ship berth capable of receiving and unloading LNG tankers with capacities ranging from 100,000 to 200,000 cubic meters; two 160,000 cubic meter storage tanks; a 36.3-mile, high-pressure pipeline in Clatsop and Columbia counties, OR, and Cowlitz County, WA; and associated pipeline support facilities.

The sendout pipe would extend from the terminal to an interconnect with Williams' Northwest Pipeline system north of Kelso, WA. Between the terminal project and the terminus of the Northwest system, the sendout pipeline would deliver regasified gas to Northwest Natural Gas Co.'s pipeline system, Georgia Pacific's Wauna paper mill and Portland General Electric's Beaver Power Plant [CP06-365, CP06-366, CP06-376].

Interested parties have 30 days to appeal the FERC order approving the LNG terminal and pipeline facilities.

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