The Oregon Department of Energy has issued a report concluding that it would be less expensive and less carbon-intensive to get additional future natural gas supplies via interstate pipelines from the Rocky Mountains rather than imported liquefied natural gas (LNG). Rockies supplies can be produced with significantly less life cycle greenhouse gas (GHG) impact than gas from LNG imports, said the report ordered earlier in the year by Gov. Ted Kulongoski.

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.

When he wrote FERC in February seeking a more complete review of alternatives to the state’s proposed LNG projects, Kulongoski asked the state energy unit to review three areas: Oregon’s future demand for gas, alternatives for providing the state’s gas and LNG’s life cycle carbon emissions compared to coal and non-LNG gas sources (see Daily GPI, Feb. 20).

Acknowledging that the U.S. energy situation is “volatile and subject to sudden change,” Michael Grainey, director of Oregon’s energy department, said in a cover letter sending the report to Kulongoski that his staff did direct research and evaluation of the western U.S. gas market as well as examining nearly 40 sources of information from federal, state and industry sources.

“Decisions made that commit major financial and environmental resources may prove wise or imprudent in the future, based on totally unforeseen and unpredictable circumstances,” Grainey said. “At minimum, our findings emphasize the need for FERC to undertake the comprehensive review that fully weighs the economic and environmental costs and benefits of all the competing proposals.”

Regarding demand, the report concluded that a new pipeline from the Rocky Mountains or one LNG terminal (there are at least four separate proposed projects) would “more than meet” the state’s increasing natural gas needs. Oregon imports all of its natural gas from either Western Canada or the Rockies now, primarily for firing electric generation plants, industrial loads and residential heating.

In assessing the alternatives of LNG and various pipeline projects, the report concluded that LNG might lower the price of pipeline supplies to an Oregon utility, but that was unlikely, given the fact that it said Pacific Basin LNG is “not currently competitive from a price standpoint with U.S. and Canadian-produced natural gas.”

On the question of life cycle GHG emissions, Oregon’s report concluded that the liquefaction, shipping and regasification steps make LNG more carbon-laden than pipeline delivery of western gas directly to power plants. Analysts used shipments of LNG of more than 10,000 nautical miles from the Middle East as part of its life cycle emissions assessment, noting that forecasts for future growth in LNG were centered on that region.

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