NorthernStar Natural Gas Co. Feb. 15 responded to a letter by Oregon Gov. Ted Kulongoski to FERC that questioned the credibility and soundness of the federal review process for NorthernStar's proposed Bradwood Landing liquefied natural gas (LNG) terminal along the Columbia River.

Kulongoski's latest response to the federal regulators was sent earlier in February in a three-page letter.

Kulongoski criticized the Federal Energy Regulatory Commission (FERC) for what he sees as its failure to assess whether a LNG facility is needed in the Pacific Northwest. He said Oregon's energy department has concluded that the western United States could only support one LNG terminal of the size of each of three different proposals that are currently active in Oregon.

"The proposals are requiring local governments and state (and federal) agencies to devote scare resources from other pressing problems to evaluate projects that in all likelihood may never be built," Kulongoski said. "The approach of approving far more facilities than will ever be built is unacceptable to me. The people of Oregon deserve better."

The governor concluded by saying he has "growing concern" that FERC's approach to licensing of plants and pipelines "has created a crisis of confidence with Oregonians."

NorthernStar CEO William "Si" Garrett said the company again pledged to the governor and other Oregon officials that even though the FERC clearly has preemption in LNG siting under the 2005 federal Energy Policy Act of 2005 (EPAct), Bradwood Landing will work with Clatsop County and state agencies to ensure that the LNG developer meets all of the state's standards.

Noting it is already following a parallel permitting process between the Oregon agencies and FERC, Garrett said he agrees with Kulongoski "that Oregon has a well defined energy siting process that has worked well for Oregonians. In fact, we originally sought approval from Oregon through its Energy Facility Siting Council process, and ours is the only LNG project in the Northwest to receive a project order from the state.

"However, the Oregon attorney general removed our Bradwood Landing terminal project from the siting council process because Congress preempted its authority [with passage of EPAct]."

NorthernStar continues to cite third-party sources as documenting the need for additional gas supplies in the Pacific Northwest, saying that in the past two years there have been nine separate studies. One of the most recent reports cited was by the consulting firm Wood Mackenzie (February 2008), "Gas and Power Service Insight -- North America, Coal Plant Cancellation: Time to Panic?"

Bradwood bills itself as Oregon's only LNG project that is located to provide the added gas supplies the states of Washington and Oregon both will need in the future.

"Studies also show that LNG is significantly cleaner than coal and releases half the greenhouse gases (GHG) on a life-cycle basis and none of the sulfur or mercury emissions associated with burning coal," NorthernStar said in its response to the governor.

With two-thirds of the region's gas coming from Canada and the rest from the U.S. Rockies, the Northwest has steadily built up a greater reliance on gas-fired power generation, NorthernStar said, and so the nine independent reports all point to the need for an added supply source. "LNG would add supply diversity and incremental capacity to the region's existing natural gas infrastructure and will serve to mitigate against future price increases," NorthernStar said.

The studies cited by NorthernStar come from a variety of public- and private-sector sources, including the state siting council, Northwest Gas Association, U.S. Department of Energy, Northwest Power and Conservation Council, Oregon Department of Energy, the North American Reliability Corp., Wood Mackenzie and the U.S. Commerce Department.

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