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Oregon Gas Report Unrealistic, LNG Proponent Says

Two weeks after its release, an Oregon Department of Energy report that discounted the need for future supplies of liquefied natural gas (LNG) in the state and Pacific Northwest was blasted by one proponent of an LNG terminal along the Columbia River near Astoria, OR.

Peter Hansen, CEO of Vancouver, WA-based Oregon LNG, told NGI that the state department relied too heavily on a recent Carnegie Mellon University researchers' report. That report concluded that a coal gasification plant with carbon sequestration would be cleaner than LNG and other alternatives. In reality "no one is pursuing carbon sequestration" on a commercial scale, so it isn't a realistic comparison, Hansen said.

The Carnegie Mellon report was issued last summer. Researchers raised doubts about the long-term effectiveness of LNG in meeting the nation's energy needs while reducing greenhouse gas emissions (see NGI, Sept. 10, 2007). The research was later criticized by the Gasification Technologies Council, which said it had "many flaws."

"I'm not sure of what value this analysis adds to the literature," he said. "There are a lot of things we could dream about, but we don't in reality pursue those ideas."

Oregon's energy department report authors concluded that the Federal Energy Regulatory Commission (FERC) needs to complete a review of all the options for the Pacific Northwest, and that at this time a case cannot be made for siting a new LNG facility in the state. It was also concluded that gas demand will continue to rise in the state during the next 20 years and new supply sources will be needed (see NGI, May 19).

Hansen said the report will not change his company's plans to make its formal filing to FERC by the end of June to proceed with development rights it obtained from Calpine Corp.'s former Skipanon LNG project near the mouth of the Columbia River in Warrenton, OR. Hansen was one of the executives with Calpine at the time the project was put together (see NGI, May 12).

He and other proponents of LNG projects in Oregon warn that the state and region cannot depend on substantial new pipeline capacity coming out of the Rockies. Markets east of the Rockies are increasingly attracting more takeaway capacity from that supply basin, they say. The Northwest's other principal supply source, western Canada, has been characterized as having declining reserves for several years now.

Ultimately, Hansen thinks that FERC should license LNG projects that meet the siting criteria, including environmental and safety mitigation, and then the market should decide which, if any, of the projects get built. Officials from FERC have said that is what the Commission intends to do, given the siting jurisdiction it has for onshore LNG facilities, he said.

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