A seemingly on- and off-again project to build a new interstate pipeline connection for the Portland, OR, metropolitan area is currently very much on and eyeing market and regulatory milestones in the first half of this year, according to senior executives at NW Natural.

Conceived as the eastern half of a 220-mile, 36-inch diameter gas transmission pipeline, the Palomar East segment would connect NW Natural's system with its Palomar partner, TransCanada's GTN interstate pipeline coming from western Canada. An open season on the eastern segment could be held this spring, according to NW Natural CEO Gregg Kantor.

Without the now defunct Bradwood Landing liquefied natural gas (LNG) terminal project along the Columbia River in northwest Oregon that was to connect with a western segment of Palomar, the eastern portion of the project "is more important than ever," Kantor said during a conference call with analysts Friday. All interstate pipeline capacity serving the region west of the Cascade Mountains is fully contracted and at maximum use during peak loads, he said.

"There is a growing consensus that Palomar East is the next logical piece of transmission pipeline needed to ensure the reliability and supply diversity in the Northwest."

Through 2010, NW Natural and TransCanada continued to push the Palomar East development, making progress on a number of key issues, according to Kantor.

Northwest Pipeline Co., the operator of the existing interstate pipeline in western Washington and Oregon, last year signed a nonbinding agreement that contemplates Northwest "potentially becoming a part owner" in Palomar, and an agreement with local Native American interests in the Warm Spring Tribe will shorten the potential pipeline route and reduce environmental impact (see Daily GPI, Nov. 8, 2010).

Earlier in February the utility held workshops with state regulators in both Washington and Oregon, outlining for them what Kantor called "the growing interdependence" of the natural gas and electric systems in the region, driven by the increased use of large amounts of renewable energy, particularly wind.

"We continue to work with potential customers on their capacity and planning needs," Kantor said. "We anticipate holding an open season this spring, and assuming we can get sufficient interest, we intend to file an amended application with the Federal Energy Regulatory Commission." He said the timing for the construction will depend on how long it takes to obtain final permitting and the needs of the shippers.

He reiterated that at this point the new pipeline would not go into service before 2016.

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