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LNG Fits Long-Term Pacific NW Energy Needs, Developer Says

In the 2012-2015 time frame, liquefied natural gas (LNG) makes sense for the Pacific Northwest, which could be losing Canadian and U.S. Rockies supplies by then, according to a developer of a proposed Oregon LNG receiving terminal. And the prices of LNG supplies will be very attractive, NorthernStar Natural Gas CEO Paul Soanes said at an energy conference Thursday in Seattle.

Even with the current slowdown in global natural gas production and new LNG liquefaction facilities, gas reserves in the Middle East, Russia and Australia are steadily growing, Soanes said at the Law Seminars International conference, "Buying/Selling Electric Power in the Northwest." NorthernStar is developing the proposed LNG receiving terminal at Bradwood (OR) Landing along the Columbia River. The project is expected to receive a draft environmental impact statement from the Federal Energy Regulatory Commission some time this quarter.

Soanes said NorthernStar's studies have indicated that all of the major supply sources for the proposed Oregon terminal, including his native country of Australia, could deliver gas to Bradwood Landing for the range of $2.11/MMBtu to $4.20/MMBtu.

"So we expect North America to compete very strongly for LNG because it has a cost structure that is well below that of existing production and finding costs in North America," said Soanes. He acknowledged that in the Asia-Pacific production areas including Australia there have been delays, but he sees those problems clearing up by 2012.

"With the forward curve future global gas prices in the $8/MMBtu range, there are some high profits out there for suppliers," said Soanes, who called LNG a "price-taker, not a price-maker."

For a proposed facility that envisions starting at 1 Bcf/d capacity, Bradwood Landing has a lot of potential buyers, Soanes said in response to a question. "We've been talking to a lot of potential buyers. They've all indicated a strong interest. They all benefit from gas coming in from a third source. It is going to improve supply security."

In response to another question about increased global reliance on gas imports helping create a 'natural gas OPEC' potentially, Soanes said "LNG is going to be the marginal fuel for gas supplies in North America."

Two other speakers on regional gas supply issues in the Northwest, Portland, OR-based energy attorney Edward Finklea, and the head of the Northwest Natural Gas Association, Dan Kirschner, supported Soanes' contention that LNG in the future will be needed in the Pacific Northwest, and it will tend to dampen natural gas prices in the region.

The prospects of LNG and Alaskan gas are inextricably tied to the Northwest's energy future in the next 10 to 20 years, they concluded.

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