Bogged down for more than two years at FERC on a liquefied natural gas (LNG) import application, the backers of Oregon LNG instead plan to turn their site at the mouth of the Columbia River into a bidirectional facility that would export Western Canadian gas supplies to lucrative Asian markets. All thee major federal filings are to be made within weeks, Project Manager Peter Hansen told NGI.

After spending two weeks briefing regulators and various officials in the state and on Capitol Hill, Hansen said the Leucadia National Corp.-backed project was making public its plans to change its site near Astoria, OR, into a $6 billion, 9 million metric tons/year LNG export facility with backup regasification facilities to be used during regional peak demand periods. The exports would begin in 2017 or 2018, Hansen said.

Oregon LNG has submitted the first preliminary U.S. Department of Energy (DOE) application, and it intends to submit two more to DOE, filings covering non-North American free trade nations and eventually non-free trade countries, he said. There will also be a pre-filing request to the Federal Energy Regulatory Commission (FERC) in the “very near future.” A lot of the previous environmental analysis work on the import project would be applicable for the export permit, he said, which involves a rerouting a proposed connecting pipeline to interconnect with Williams’ Northwest Pipeline’s interstate lines that carry gas from Canada.

“Eventually we would work with Williams to rework the pipelines coming down from Canada because this export project is all focused on Canadian gas,” said Hansen, who noted that the additional supplies from the shale boom in British Columbia’s Horn River Basin and elsewhere have to get to Asian markets either through the prospective Canadian export proposals or from Oregon, where Jordan Cove also is seeking to export gas to overseas markets from the south-central Oregon coast (see NGI, April 23).

“Canadian gas has lost and continues to lose its market in the United States,” Hansen said. “We are simply saying, ‘why don’t we re-route some of that Canadian gas down here for export?'”

Is there room for two major export facilities in Oregon and at least one Canadian facility? Hansen said “yes,” noting that not all of Oregon LNG gas would come from Canada. Like the Jordan Cove project, Oregon LNG retained Navigant Consulting Inc. to complete a market analysis, which concluded that costs for transporting Canadian gas to a facility at the mouth of the Columbia River would be competitive.

A source close to the competing Jordan Cove project speculated that two Oregon export projects could strain existing interstate pipeline capacity from Canada and drive up natural gas prices in the Northwest, but the source cautioned that there was no hard analysis behind the opinion.

Hansen said Oregon LNG views the Warrenton, OR, facilities as strictly tolling, meaning it doesn’t want to own any of the gas, and it intends to take on partners — possibly both Canadian producers and Asian end-users/shippers. He said he has been in talks with several companies that are players in the Pacific Rim. The prospects for exporting Western Canadian gas are a lot better than “being stuck in the FERC application process since March of 2009 until the end of last year,” Hansen said.

“In the meantime, the market has moved. It may have been a blessing in disguise that we were forced to sit and wait so long so we didn’t get too far down the road. We did not have a draft environmental impact statement from FERC.”

Two developments earlier this month helped to solidify Oregon LNG’s plans for the Port of Astoria site that is leased indirectly from the state. A ruling last year by the Oregon Department of Justice against the site being used for gas exports has been rescinded and separately, the project has reached an agreement with two local trade unions that Hansen called a “major milestone” in allowing construction to begin in 2014 if all the required permits are obtained.

Import capability and/or regasification would be built into the project because the Pacific Northwest gas market is “very peaky,” said Hansen. “There is still the possibility of gas shortages on a peak day here,” so Oregon LNG would have the ability to shut down on extremely cold winter days. “We’ll have the capability to regasify whatever we have in the tanks. It will be a true bidirectional facility.”

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.