NGI The Weekly Gas Market Report / NGI All News Access

Ruling Favors Oregon LNG in Lease Dispute

Oregon LNG, one of three proposed liquefied natural gas (LNG) receiving terminals in Oregon, received some positive signals last Tuesday in its negotiations with the Port of Astoria Commission over renewal of a long-term lease for its proposed 96-acre site. A federal magistrate ruled in favor of the project developer on the lease extension and Oregon Gov. Ted Kulongoski's office said it would not investigate the lease issue as some anti-LNG groups were urging.

The 65-year lease, with two 30-year increments, is subleased by Oregon LNG from the port, which holds the land through the Oregon Department of State Lands. Both the port's lease with the state and the sublease allow for a unilateral lease extension for 30 years, and that is what the company did with the sublease earlier this year. However, the port has been reluctant to move forward.

Oregon LNG accepted that U.S. Magistrate Judge John Jelderks' ruling, but the Port of Astoria has indicated it wants a federal district judge to rule, which may extend the issue a few more weeks, according to Oregon LNG CEO Peter Hansen, who spoke with NGI Thursday. Hansen maintains that the project is still on schedule to have all of its federal and state permits wrapped up some time in 3Q2010 to build its $1 billion project on a long-held Skipanon Peninsula site near Warrenton, OR.

The port has until Dec. 3 to decide if it wants to appeal the magistrate's decision in federal court, Hansen said. "Both parties have to agree to the magistrate's decision to make it final, and we agreed to it, but apparently the port has not."

Hansen said Oregon LNG has maintained that under the terms of its original agreement with the port for the sublease, if his company unilaterally extended the sublease, then the port was obligated to extend its lease with the state. However, the port eventually only extended its lease for two years.

This situation makes it impossible to line up financing for the project, said Hansen, noting that is why Oregon LNG turned to the federal courts and the port subsequently counter sued in state court.

©Copyright 2009 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus