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Palomar Withdraws FERC Application, But Does Not Give Up on Project

On the heels of the NorthernStar Natural Gas bankruptcy filing and abandonment of its FERC-permitted Bradwood Landing liquefied natural gas (LNG) terminal in northwest Oregon, the Palomar Gas Transmission LLC pipeline, which had a potential connection with Bradwood, has filed a notice with the Federal Energy Regulatory Commission (FERC) to withdraw its application to build the pipeline to serve the Pacific Northwest.

But Palomar said it has not given up entirely on the pipeline project (see Daily GPI, Dec. 15, 2008). "The bankruptcy court decision in the fall of 2010 to terminate Palomar's precedent agreement with NorthernStar allowed Palomar to shift efforts on the west section of the proposed project route to fully [focus] on solidifying routing decisions and shipper support for the east section.

"These efforts have led to significant progress in developing a regional solution to meet the need for additional natural gas transmission in the Pacific Northwest, to wit, an agreement with the Confederated tribes of the Warm Springs Reservation has secured a route for the east section that is shorter than the original proposed route, avoids an above-river crossing of the Deschutes River, and reduces Palomar's footprint within the Mt. Hood National Forest," the pipeline company told the Commission [CP09-35].

Conceived as the eastern half of a 220-mile, 36-inch diameter gas transmission pipeline, the Palomar East segment would connect Northwest Natural Gas Co.'s system with its Palomar partner, TransCanada's Gas Transmission Northwest GTN pipeline coming from western Canada.

Without the now defunct Bradwood Landing LNG terminal project along the Columbia River in northwest Oregon that was to connect with a western segment of Palomar, the eastern portion of the project has become more important than ever, according to Northwest Natural (see Daily GPI, March 1).

Northwest Pipeline, the owners of the existing interstate pipeline serving Oregon and Washington, has expressed an interest in becoming part owner in an integrated regional project, said Palomar. In addition, "workshops with state utility commissions in Oregon and Washington [have] yielded meaningful discussion of the region's future pipeline capacity needs and the growing reliance of the electric system on the natural gas system," it noted.

"While Palomar continues to feel strongly that the development of an additional natural gas infrastructure project in Oregon is critical for future growth in the region, potential customers have recently indicated that a new pipeline will not be needed as soon as predicted due to the global recession and other factors. Palomar has determined that the most effective and efficient way to accommodate adjustments to the project to meet the needs of potential customers and partners, including an improved east side route, is to file a new certificate application for an update project in the project."

Palomar called on the Commission to "preserve the record developed in [the current] certificate proceeding for potential use in Palomar's future certificate applications. Palomar anticipates that the future proposal will include the market solutions currently being pursued by Palomar and will incorporate material relating to the eastern section of the Palomar project as currently included and supported in this proceeding."

Once Palomar gets sufficient commercial support for its revised pipeline project, it said it will file a certificate application with FERC.

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