Developers of a proposed liquefied natural gas (LNG) import-export project at the mouth of the Columbia River in Oregon remain undaunted by a court reversal last month that upheld a local reversal of a county permitting approval.

At issue are local land-use approvals that the Clatsop County elected board issued to Oregon LNG two years ago for its proposed facilities at Warrenton, OR (see Daily GPI, Aug. 25, 2010), only to have a newly elected board later reverse that decision. The LNG developer filed a lawsuit, but the local action has now been upheld by the Oregon Appeals Court.

In the overall permitting process now awaiting a draft environmental impact statement (EIS) from the Federal Energy Regulatory Commission, the state appellate decision is not a major setback, Oregon LNG CEO Peter Hansen told NGI on Thursday. Local permitting, however, is one of three key criteria for demonstrating a project’s conformance to coastal zone environmental requirements under the 2005 federal Energy Policy Act, Hansen said.

Oregon LNG has until later in November to decide whether it will appeal the court ruling to the Oregon Supreme Court or pursue alternatives for demonstrating its compliance with coastal zone requirements. Either way, Hansen is not immediately concerned because the local permitting is not germane to the project’s pending export permits from the U.S. Department of Energy (DOE).

“As far as timing is concerned, it probably doesn’t impact us,” Hansen said. “We can ‘t apply for the coastal zone management act consistency ruling from the state until the FERC EIS is out anyway, and that isn’t expected until the second quarter next year. In other words, it is not on a critical path yet, although it is needed for our construction authority.”

Hansen stressed that there are alternatives for getting the needed coastal zone approval without having a local permit, and Oregon LNG is exploring those options as it reviews the appellate court decision to determine if it wants to appeal to Oregon’s highest court.

“Going through the local processes is not necessarily the only way to get the coastal OK,” said Hansen, although he did not want to discuss what the alternatives are. “In our opinion, we certainly meet all the standards for the coastal zone act.”

He blamed “pure local politics” for the court fight. “It has nothing to do with the standards.” Hansen stressed that the area of the Warrenton waterfront where the LNG facilities are proposed is already a zone where oil and gas development is designated as a “conditioned” use.

Oregon LNG’s backers are a major publicly held funding partner, Leucadia National Corp., a New York City-based diversified holding company, along with Hansen, himself, who began the now multi-billion-dollar project as an import terminal in 2004. Hansen had been the head of western development for Calpine Corp., but following the power plant developer’s Chapter 11 bankruptcy filing in late 2005 he led a small group of management to purchase the development rights with the help of Leucadia.

In addition to its proposed export and receiving facilities at Warrenton, Oregon LNG has proposed an 86-mile, 36-inch diameter transmission pipeline running easterly into the state of Washington where it would connect with an enhanced portion of Williams’ Northwest Pipeline Co. at Woodland, WA (see Daily GPI, July 6).

Oregon LNG has signed an agreement with Northwest Pipeline calling for the LNG project backers to pay for all of the pipeline company’s regulatory processing fees for the completion of an upgrade of two pipelines running from the Canadian border to Woodland, roughly paralleling Interstate Highway 5. The upgrades, estimated by Hansen to cost $650-750 million, would provide two parallel 30- and 36-inch diameter pipelines to carry British Columbia and Alberta gas for export.

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