Oregon LNG, a unit of Leucadia National Corp., announced last week 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, senior vice president Mohammed Alrai.

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.

“We believe this site is the optimum location for an LNG terminal on the West Coast,” Hansen said. According to Hansen, the site is “ideal” from both safety and security standpoints. “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 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.

With its private equity backing, Oregon LNG has sufficient funds — in the $30 million to $40 million range — to carry out the permitting for the project. The project will be financed later, with an estimate of $700 million for the terminal and $300 million for the connecting pipeline from the coast to the major north-south interstate transmission pipelines.

Oregon has four other active proposals for LNG terminals — three upstream along the Columbia River in Oregon and one at Coos Bay along the southern Pacific Coast of the state. The latter project, Jordan Cove, was slated to make a filing this month to FERC, but has since delayed it until September.

A project farther in from the coast and along the banks of the Columbia, Northern Star Natural Gas Co.’s Bradwood Landing, is the furthest along in the permitting process, and in March it received a favorable U.S. Coast Guard report, saying the lower Columbia River is suitable for LNG deliveries as long as several safety and security conditions are met.

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