Daily GPI / NGI All News Access / Liquefied Natural Gas (LNG)

Pacific Northwest Cautiously Eyes Gas-Based Industrial Growth

While the Pacific Northwest has experienced a number of recent proposals for major energy projects that could mean considerable economic benefits and added natural gas demand for the region, stakeholders are adopting a somewhat skeptical wait-and-see attitude, given that no construction on any of the major proposals has gotten under way.

There are now two proposed liquefied natural gas (LNG) export projects in Oregon, two proposed methanol production plants in the state of Washington along the Columbia River, and oil/railroad transport facilities in north and south Washington.

The newest proposal -- the methanol plants proposed by a Chinese company and a unit of BP plc -- drew skepticism from one Oregon-based energy stakeholder who questioned how serious the partners are.

Nevertheless, natural gas industry and state economic development officials are expecting increasing industrial gas demand in the coming years whether or not the mega gas-hungry projects are ever built.

"We are seeing increased interest in industrial uses of natural gas," said Dan Kirschner, executive director of the Northwest Gas Association (NWGA). Kirschner said that few of the major projects are being discussed much publicly, but he is aware generally of "a number of discussions" occurring around his region.

As a result NWGA plans to incorporate an accelerated industrial demand scenario in its revised 2014 natural gas outlook slated for around mid-year, Kirschner said. The document will contemplate additional gas demand from "a variety of industrial projects such as increased LNG/compressed natural gas (CNG) for transportation, along with additional food processing, fertilizer manufacturing, and the possibility of a petroleum chemical plant in the region.

"We designed the scenario prior to being made aware of the methanol plants, but they are specific examples that typify potential development in the region," Kirschner said. "It is perfectly reasonable, in fact historic, to think that large projects like the proposed methanol plants could undergird infrastructure development, which in turn might create opportunities for other smaller users."

Oregon's state business development arm, Business Oregon, is always seeking more industrial development for the state; that's part of its mission, according to spokesperson Marc Zolton. "I'm sure there are other projects in the state and some we haven't heard about yet."

Zolton said the state business development agency generally is "pretty bullish" about the industrial sector these days. In manufacturing particularly, Oregon is one of the strongest states in the nation. "We have made a lot of efforts recently to prepare industrial sites around the state, getting the land certified and shovel-ready," he said.

"I can't speak of any specific projects in the pipeline, but at this point, we don't have any reason to be pessimistic," said Zolton, noting that three of the last five years Oregon as been among the top manufacturing states, particularly for exports. "We're one of the fastest growing state economies in the nation; we just hit our lowest unemployment in five years."

He said the state is definitely interested in the proposed methanol plants because of the numbers of permanent new jobs involved even though the plants would be across the Columbia River in the state of Washington, but not that far from the greater Portland metropolitan area on the Oregon side of the river.

Oregon LNG CEO Peter Hansen was brusque in talking about the potential impact from the proposed methanol projects although both his project and the two new ones are planning on relying on Williams' Northwest Pipeline Co. for their gas supplies. Oregon LNG has an agreement with Williams to expand its capacity to a point in south-central Washington where the LNG project's new 87-mile, 36-inch diameter supply pipeline will interconnect.

"We have an agreement with Williams for it to permit an expansion of Northwest Pipeline, and that entitles us to contract capacity up to 750 MMcf/d," Hansen said. "If [the methanol plants] need expansion our work could be expanded more, I suppose. That could precipitate an expansion of the pipeline from Stanfield, OR, into the Portland area, and we'd be fine with that."

Recent Articles by Richard Nemec

Comments powered by Disqus