Bogged down for more than two years at FERC on a liquefied natural gas (LNG) import application, the backers of Oregon LNG have decided to join the growing list of proposed North American LNG export projects and turn their site at the mouth of the Columbia River into a bidirectional facility that concentrates of exporting western Canadian gas supplies to lucrative Asian market. They hope to have all their major federal filings made within weeks, Project Manager Peter Hansen told NGI on Tuesday.
After spending the past two weeks briefing regulators, local elected officials and news media in Oregon and on Capitol Hill, Hansen said the Leucadia National Corp.-backed project was making public its plans to change its site near Astoria, OR, into a $6 billion, 9 million metric tons/year LNG export facility with backup regasification facilities to be used during regional peak demand periods. The exports are expected to start in 2017 or 2018, Hansen said.
Hansen said Oregon LNG has submitted the first preliminary U.S. Department of Energy (DOE) application, and it intends to submit two more to DOE, filings covering non-North American free trade nations and eventually non-free trade countries. There will also be a pre-filing request to the Federal Energy Regulatory Commission in the “very near future.” Hansen thinks much of the previous environmental analysis work on the import project will be applicable to the new application, which involves a rerouting of a proposed connecting pipeline to interconnect with Williams’ Northwest Pipeline’s interstate lines carrying gas from Canada.
“Eventually we would work with Williams to rework the pipelines coming down from Canada because this export project is all focused on Canadian gas,” said Hansen, noting that the additional supplies from the shale boom in British Columbia and elsewhere have to get to Asian markets either through the prospective Canadian export proposals or the ones in Oregon (there is also Jordan Cove on the south-central Oregon coast) (see Daily GPI, Oct. 27, 2010).
“Canadian gas has lost and continues to lose its market in the United States,” Hansen said. “We are simply saying, ‘why don’t we re-route some of that Canadian gas down here for export.'”
Is there room for two major export facilities in Oregon and at least one Canadian facility? Hansen said yes, noting that not all of the second proposed Oregon project’s gas would come from Canada. Like the Jordan Cove project, Oregon LNG retained Navigant Consulting Inc. to complete a market analysis, which concluded that costs for transporting Canadian gas to a facility at the mouth of the Columbia River would be very competitive.
A source close to the competing Jordan Cove project speculated that two Oregon export projects could strain existing interstate pipeline capacity from Canada and drive up local natural gas prices in the Northwest, but the source cautioned that there was no hard analysis behind the opinion.
Hansen said Oregon LNG views the Warrenton, OR, facilities as strictly tolling, meaning it doesn’t want to own any of the gas, and it intends to take on partners — both Canadian producers and Asian end-users/shippers. He said he has been in talks with a number of these companies that are players in the Pacific Rim. The prospects for exporting western Canadian gas are a lot better than “being stuck in the FERC application process since March of 2009 until the end of last year,” Hansen said.
“In the meantime, the market has moved. It may have been a blessing in disguise that we were forced to sit and wait so long so we didn’t get too far down the road. We did not have draft environmental impact statement from FERC.”
Two developments earlier in April helped solidify Oregon LNG’s plans for the local Port of Astoria site that is leased indirectly from the state. A ruling last year by the Oregon Department of Justice against the site being used for gas exports has been rescinded, and separately the project has reached an agreement with two local trade unions in what Hansen designated as a “major milestone” for allowing construction to begin in 2014 if all the federal, state and local permits are obtained.
Import capability and/or regasification will be built into the project because Hansen maintains that the Pacific Northwest gas market is “very peaky. There is still the possibility of gas shortages on a peak day here,” he said, so Oregon LNG will have the ability to shut down on really cold winter days. “We’ll have the capability to regasify whatever we have in the tanks. It will be a true bidirectional facility.”
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