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Pipeline Proposals Spawned in NW from Potential LNG Projects

With a still relatively short history of natural gas use in the region, the Pacific Northwest has limited gas pipeline options, but the situation may change now that several liquefied natural gas (LNG) terminals have been proposed for Oregon's Pacific Coast and Columbia River banks. Proponents outlined two of the major new pipeline proposals -- Palomar and Pacific Connector -- at the LDC Forum: Rockies & West conference in Los Angeles Tuesday and Wednesday.

Both are joint venture proposals, with Pacific Connector being prompted by Canada-based Fort Chicago Energy Partners' proposed Jordan Cove LNG terminal at Coos Bay along the Pacific Coast. The LNG developer has hooked up with Williams and Pacific Gas and Electric Co. to propose a new natural gas line from the terminal to the existing interstate pipeline from western Canada that brings gas into California at the Oregon-California near Malin. Palomar would be built in two phases in northern Oregon from the same TransCanada NTG pipeline out of Alberta, Canada, northwesterly over to Portland in its first phase, and farther north and west in its second phase to the proposed site of the Bradwood Landing LNG terminal along the Columbia River, about 40 miles inland from Astoria, OR.

Palomar is a potential joint venture between TransCanada Pipeline and the local distribution utility, Northwest Natural Gas, which has been proposing to build some version of Palomar for years to overcome the fact that there is only one major pipeline bringing gas supplies into its system.

"We actually had a working agreement back in the 1990s with Pacific Gas Transmission when it owned and operated the pipeline out of Alberta," said Randy Friedman, Northwest Natural's gas supply director. "It was called the 'Portland Lateral' at one time. We just concluded an open season on it the end of October."

Rather than an equity position in the proposed pipeline, Friedman said the major motivator for his utility is "risk management" to mitigate the fact that 90% of Northwest Natural's current supplies come through the Williams Northwest Pipeline system. Half of the utility's supplies come from Alberta, a quarter from the Rockies, and all of that gas goes through a single pipeline in the Columbia River Gorge.

"That's a risk, so having an alternative pathway to get some of our supplies into our service territory from a risk management standpoint is something we need to look at," Friedman said. "We're not going to do it unless it is cost effective, and I am being told right now that it cannot be done in a cost-effective way. There are other options."

For now, Palomar is being proposed to start up around 2011, which coincides with the proposed start-up for a still-to-be-permitted LNG terminal along the Columbia. If there was a connection to the LNG terminal, the pipeline would be boosted from a 24-inch-diameter line to a 36-inch-diameter pipeline.

"We're all in favor of having LNG brought into this country. More supply is good," Friedman said. "In Oregon, would be good, and in the Columbia River is best from our point of view. However, the cost of all of this has to be competitive with alternatives."

The Jordan Cove LNG proposal and related pipeline also would be looking to be a conduit to the larger western markets, 60% of which the Coos Bay site backers say they could access by building a new pipeline to Malin,OR, at the California border. It would be a nearly $1 billion undertaking ($960 million in current estimates), stretching 223 miles with 36-inch-diameter pipe whose capacity would be up to 1 Bcf/d.

Gas eventually could flow north in Oregon and Washington, and south into California and Nevada. "But we won't build anything without long-term market interest," said Vern Wadey, Fort Chicago's vice president, business development. Ultimately he said the LNG terminal and the Pacific Connector pipe would ignite the development of new energy hubs and storage in California and the Northwest.

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