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Fate of Planned Northwest Gas Pipeline in Doubt

A recent legal settlement may have cast further uncertainty on a long-standing proposal for the Palomar natural gas pipeline to bring Rockies gas west of the Cascade Mountains into Pacific Northwest population centers. Backers of the scaled-down 220-mile, 36-inch diameter line, say it is still alive but "on hold." However, without new commercial commitments for the pipeline, at least one of the backers said the project won't go forward.

Revised "regional plans" for the pipeline are being worked out among its three main backers -- TransCanada Corp., NW Natural and Williams' Northwest Pipeline Co., a Houston-based spokesperson for TransCanada told NGI on Friday. The regional plans follow a legal settlement among federal government agencies and environmental groups to rework proposed energy corridors for future gas and electric transmission lines in the West.

Opponents of the Palomar project that were parties in the settlement in the U.S. District Court for the Northern District of California have characterized the court action as the death knell for the pipeline project. But backers won't accept that negative assessment, even though a filing to the Federal Energy Regulatory Commission (FERC) was withdrawn last year, and there is no target date for either a revised FERC filing or another open season to test market interest. The gas supply line would run along the Interstate Highway 5 (I-5) corridor through the Cascades to Northwest markets.

"We're having discussions with Williams' Northwest Pipeline for what we're calling a regional approach," the TransCanada spokesperson said. "We don't have anything finalized, however, so the status of the pipeline is on hold while we explore options that might involve Northwest Pipeline, NW Natural and ourselves."

The spokesperson said the most important factor at this point is that the major local gas distribution utility and the region's two major interstate pipelines are cooperating to come up with a way to get more gas across the Cascades, into the Willamette Valley and up the I-5 corridor. "What is going to drive that is commercial commitments, and we're still in the process of trying to get those together," said the spokesperson, adding that an open season is contemplated, but "way down the road."

NW Natural CEO Gregg Kantor during a 1Q2012 earnings conference call earlier this year said despite the FERC application being pulled the Palomar partners intended to file a revised application. "This year our goal is to continue to work with Northwest utilities to consolidate the effort to find a single, integrated solution around a shorter route," he said in late February (see NGI, March 5). An open season is planned this year aimed at "identifying enough shipper support to proceed with the planning process," according to Kantor.

Trouble for the Palomar project started last year after the Bradwood Landing liquefied natural gas (LNG) terminal project was pulled. The project was to connect with a western segment of Palomar. Nevertheless, Kantor said at the time the eastern portion of the project was "more important than ever" (see NGI, March 7, 2011). All interstate pipeline capacity serving the region west of the Cascade Mountains was fully contracted and at maximum use during peak loads, he said last year.

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