Oregon officials and news media were examining the viability of two remaining (liquefied natural gas) LNG receiving terminal projects last weekend following the bankruptcy of NorthernStar Natural Gas Corp. and its abandonment of the Bradwood Landing LNG project along the Columbia River. Based on news media reports, NorthernStar spent $100 million during the past six years of permitting for the Bradwood site, but company officials were unavailable to verify that estimate.

Officials connected with the two remaining projects have told local news media that they are undertaking the permitting process in a more austere and careful way than their NorthernStar counterparts. The remaining two projects are the Jordan Cove proposal along the Pacific Coast at Coos Bay on the south-central coast, and Oregon LNG, another proposal along the Columbia River, although closer to where in flows into the Pacific than was the Bradwood site.

In raising the question of what the NorthernStar project’s demise means for the future LNG prospects in Oregon, a report in the Portland Oregonian newspaper said the economics of importing LNG are “looking bleak,” citing the claims of NorthernStar officials who said potential LNG financial backers are more reluctant than they were a few years ago. In addition, the paper cited strong competition from North American gas supplies with proposed pipelines from Wyoming on the verge of final regulatory approvals.

The newspaper report cited industry sources as saying that NorthernStar’s demise doesn’t necessarily means that an LNG terminal isn’t viable in Oregon, or that the permitting process is impossible to get through.

“Rather, it may be that NorthernStar went about it in the wrong way, and ultimately sank its own ship. The fatal flaw for Bradwood may have been the Bradwood location itself. The problem was there from the get go,” the Oregonian said.

Separately last Thursday, Oregon LNG asked the Port of Astoria Commission for the right to purchase less than five acres of port land near its proposed LNG terminal site, although it was not immediately clear why the company wants to buy the land. The port is negotiating its way out of potential damages in a breach of contract lawsuit filed by Oregon LNG last year (see Daily GPI, Nov. 20, 2009). The lawsuit arose from a conflict with the company’s sublease of 96 acres on the Skipanon Peninsula in Warrenton.

Last November, a federal magistrate ruled in favor of the LNG project developer on the lease extension and Oregon Gov. Ted Kulongoski’s office said it would not investigate the lease issue as some anti-LNG groups were urging it to do. The 65-year lease, with two 30-year increments, is subleased by Oregon LNG from the port, which holds the land through the Oregon Department of State Lands.

Both the port’s lease with the state and the sublease allow for a unilateral lease extension for 30 years, and that is what the company did with the sublease earlier this year. However, the port has been reluctant to move forward (see Daily GPI, June 4, 2009).

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