Expressing confidence that his energy projects ultimately will win, a lead manager for Oregon’s proposed Jordan Cove liquefied natural gas (LNG) import terminal and a related 234-mile natural gas transmission pipeline to interconnect with the regional gas grid told NGI that an ongoing state-federal fight in a district court in Eugene, OR, likely will not be resolved until mid-2011. In the meantime there are other permits that Pacific Connector Gas Pipeline will be pursuing that won’t be finished until the same time next year.

By filing the lawsuit against two Oregon state agencies late in August, all of the pipeline project’s pending permits essentially are on the same track, according the Jordan Cove LNG Project Manager Bob Braddock. Other permitting is mostly with federal agencies, such as the U.S. Forest Service, over which a number of miles of the proposed pipeline will traverse, so both the Bureau of Land Management (BLM) and the U.S. Forest Service are involved, Braddock said.

Project backers have accused Oregon state officials of stacking the regulatory deck against the LNG terminal because of widespread opposition to the project by the state’s attorney general and the Oregon Departments of State Lands and Land Conservation and Development (DSL and DLCD). Pacific Connector backers allege that the treatment of the project in Oregon is unconstitutional, unnecessary and unfair to landowners.

The Pacific Connector project is having state regulatory requirements thrust at it as a “pretext to impose the preferences of certain state policymakers to keep LNG terminals and associated pipelines from fairly being considered under the laws of the state,” Pacific Connector attorneys said in the lawsuit against the DSL and DLCD.

The departments are using state law to “unreasonably delay and substantially interfere” with the overall permitting and construction of the proposed pipeline, the Pacific Connector developers said in the lawsuit, noting that what they called a significant portion of the proposed 36-inch-diameter, 1 Bcf/d pipeline is located adjacent to existing rights-of-way or on federally owned land. Inherent opposition to any LNG project is coloring the state departments’ application of Oregon laws, the pipeline backers allege.

In the meantime, the pipeline gained some land-use approvals from Coos County, in which the LNG terminal is to be located, and state legislation is being pursued to help resolve the state interference, according to Braddock. As for the Coos County permit, he said it likely will be appealed to the Oregon Land Use Board of Appeals by the end of September.

If all goes as Braddock hopes, the LNG project and proposed natural gas transmission pipeline eventually will be able to move ahead and put off until closer to construction time the need to get landowners voluntarily or through eminent domain to provide all of the rights-of-way needed for the project. “At the end of the day, you always have the ability to use eminent domain, but you only want to use that as a last resort,” Braddock said.

He thinks the overall project has been “politicized quite heavily,” and the possibility of a legislative fix next year is still possible in the same mid-year time frame as the lawsuit and permitting resolutions. At the state level, this problem has come up before, according to Braddock. “It is an issue that has been festering, not just for us, but for other industries, too, such as roads and other infrastructure.”

Aside from the regulatory and state-federal jurisdictional questions, the Pacific Northwest natural supply/demand balance appears to have shifted quite significantly in the past two years, prompting more gas infrastructure projects that were on the drawing board to be pulled back. Nevertheless when asked about it, Braddock said it doesn’t worry him at all.

Williams Northwest Pipeline Co., which was the latest to pull back a proposed regional pipeline extension into the Interstate-5 corridor, is also one of the principal backers of the Pacific Connector pipeline, along with a unit of PG&E Corp. and Avista Corp.

Braddock said the Northwest Pipeline proposal, as well as others, were probably ill-conceived to begin with, and he sees it as a positive for the region that at this point that the pipeline proposal has been suspended. Some of the projects “diluted the focus of attention” on the region’s long-term needs, he said, noting Jordan Cove has its conditional federal certificate, while other projects are a long way from getting those approvals.

He also thinks the ongoing local opposition to his LNG and pipeline projects is dissipating and is much more “low-profile” than it was a few years ago.

In its lawsuit, the pipeline backers have emphasized their contention that Oregon has taken the position that the pipeline project has to acquire property through eminent domain to obtain the landowners signatures of approval before permitting with the two Oregon agencies can begin, Welling said. “Historically, pipelines only acquire land through eminent domain as a last resort, and even then only after permitting is nearing completion and after regulatory agencies have fixed the final pipeline route. It is one of the last things that takes place.”

Oregon Attorney General John Kroger, head of the state justice department, has publicly declared his opposition to LNG projects in the state, the pipeline backers said, citing an Oregon Department of Justice news release in January this year.

Regardless of the state officials’ motivations, their interpretation of the state requirement for landowner signatures as applied to the Pacific Connector project “directly conflicts with the Federal Energy Regulatory Commission’s authority over and approval of the pipeline project.”

“Public statements and comments by Oregon state officials strongly suggest that the state’s application and enforcement of the landowner signature requirement to Pacific Connector are a pretext to impose the preferences of certain state policymakers to keep LNG terminals and associated natural gas pipelines from being considered under the laws of the state,” the pipeline backers said in their court filing.

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