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.

“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 that the new pipeline could not go into service before 2016.

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