Oregon LNG, a unit of Leucadia National Corp., announced Tuesday that it gained FERC approval to use the National Environmental Policy Act (NEPA) pre-filing process for its proposed liquefied natural gas (LNG) receiving terminal at the mouth of the Columbia River on the Oregon side. It proposes to develop the project and related pipeline originally conceived as Skipanon by Chapter 11-bound Calpine Corp. Oregon LNG purchased the development rights from Calpine in February.

Located at Warrenton, OR, just east of Astoria, Oregon LNG's private equity backers envision the plant being the primary, if not only, U.S. West Coast LNG facility, serving the Pacific Northwest and to a broader extent the entire western region. They are banking on the fact that a lot of the early development and local permitting work, which Calpine began in 2004, is completed, including the assessment of alternative sites in the Columbia region, according to Oregon LNG CEO Peter Hansen.

Calpine eventually leased a 96-acre site from the Port of Astoria and began a long local site rezoning process, which has now been completed. It clears the way for building an LNG facility on the site once federal approvals are obtained. Hansen said Oregon LNG is timing its project to coincide with "the commissioning of significant new LNG production facilities in the Pacific Basin."

Looking forward, the latest entrant in Oregon's LNG competition has big plans and a five-year timetable for siting a tolling facility to process LNG from sources scattered around the world, according to one of the two principal executives running Oregon LNG, Mohammed Alrai, senior vice president, who spoke to NGI last Friday (see Daily GPI, June 19).

Earlier this month Oregon LNG confirmed it was beginning the pre-licensing review phase with the Federal Energy Regulatory Commission (FERC) to build a 117-mile pipeline along the Oregon side of the Columbia River that would link the proposed terminal with the major interstate pipelines traversing Oregon's Interstate 5 highway corridor (see Daily GPI, June 12).

"We believe this site is the optimum location for an LNG terminal on the West Coast," said Hansen in making Tuesday's announcement on the FERC OK. Hansen called the site "ideal" from both safety and security standpoints, focusing on the site and shipping routes being remote from major population centers. "The site will accommodate the largest LNG tankers and provide great market access to the entire western United States."

Oregon LNG expects to get through the FERC process by early in 2009, and be able to begin a three-year construction process by mid-2009, Alrai said. That would call for beginning operations of a $1 billion, 1 Bcf/d terminal some time in 2012, with the option of expanding it to 1.5 Bcf/d, depending on the market interest.

The expected 2012 operations start date should coincide with a surge in demand for new gas supplies in the West, Hansen said, predicting that in five years imports from Canada will have decreased and demand for more gas in the Pacific Northwest and West generally will be strong.

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