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Private LNG Play Gets Financing for OR, CA Projects

NorthernStar Natural Gas, Inc., a dark horse in the race for siting a liquefied natural gas (LNG) terminal along the U.S. West Coast, announced last Monday it has completed a $100 million private offering of convertible notes to qualified institutional buyers.

Net proceeds of the sale of the notes will allow the company to fund its proposed LNG projects in the Columbia River on the Oregon side, and the conversion of an existing offshore California oil platform into an LNG receiving facility. They are known respectively as the Columbia River and Clearwater Port projects. The Oregon site is at Bradwood Landing, and the Southern California site is on an existing platform 12.6 miles offshore.

The company promotes its projects in Oregon and California as a means of meeting the growing natural gas shortages in the West through what it describes as "safe, affordable and environmentally superior" projects.

Currently the company said its Oregon project is the only one in that state in what it called "the final stages of the Federal Energy Regulatory Commission (FERC) permitting process," and in California the Clearwater Port proposal is making "final improvements," in preparation for updating its applications next month with the U.S. Coast Guard and the California State Lands Commission.

NorthernStar's President Paul Soanes said the new funding will allow the company to complete what it called "the development stage" of both projects. "We believe our portfolio of projects will be more attractive to potential suppliers than single project entities because we can provide them with flexibility to deliver LNG to multiple receiving points connecting to several major pipelines and West Coast markets."

While not specifying a source(s) of LNG, Soanes speculated his company's "competitive advantages" will eventually result in "lower costs and better services" for consumers in the markets served by the two terminals. The company's CEO, Willaim Garrett, also said NorthernStar can save on the development costs by attempting to permit two different LNG facilities in two different West Coast states simultaneously.

NorthernStar is 35% owned by its management, and 50% owned by private equity funds managed by MatlinPatterson Global Advisers LLC. It boasts that its senior management holds significant energy project development experience, which NorthernStar describes as more than 50 infrastructure projects with an aggregate value of more than $15 billion, including involvement in either the development, construction or operation of nine LNG projects worldwide.

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