Despite setbacks, LNG backers still push for Ore. pipeline

EUGENE, Ore. (AP) – To read the headlines, September was a bad month for supporters of a liquefied natural gas terminal in Coos Bay and a pipeline from there to the Southeastern Oregon town of Malin.

The Pacific Connector Gas Pipeline Project kicked the month off by suing the state, charging that Oregon is using its permitting clout to thwart a proposed 230-mile pipeline for political reasons.

Opponents quickly appealed Coos County's Sept. 8 approval of a conditional use permit for the Pacific Connector Gas Pipeline Project's proposed 230-mile line, which means a delay, at least.

And, two days after Coos County's decision, an explosion at a natural gas line in San Bruno, Calif., leveled 50 homes and killed four people. The California pipeline's owner, Pacific Gas and Electric Corp., is one of the partners in the Oregon proposal.

Opponents of the Oregon project say the San Bruno disaster has spooked many of the 220 landowners from whom Pacific Connector is seeking permission to cross their rugged, forested land.

Experts both for and against the proposal say the real arbiter of this project - and LNG terminals and pipelines anywhere - will be the free market.

Even if the local project jumps through all the necessary hurdles - it already has federal and county approval - if investors don't see enough U.S. demand for foreign LNG, they won't cough up the cash to pay for the terminal or the pipeline.

Right now, with domestic production of shale gas in the Midwest still on the rise, hauling LNG across oceans is illogical, opponents of the project say.

But these things tend to go in cycles, counters Bob Braddock, project manager of the Jordan Cove Energy Project, which is in charge of the Coos Bay terminal proposal. Energy producers are shifting their exploration efforts from gas to oil because gas prices have failed to keep up with oil, Braddock said.

"Everyone rightly or wrongly believes the current price of natural gas is too low to be sustainable," Braddock said. "Where the prices settle at is the real issue."

If the scales balance and gas prices begin to creep back up, LNG imports become a better bargain in a year or so.

All of which means the battles happening in Oregon over permits and eminent domain may wind up irrelevant, unless the opponents actually win one of them and get some portion of the project completely stopped. If Jordan Cove and Pacific Connector had all of its regulatory hurdles cleared and lawsuits settled today, they wouldn't have the money to build, Braddock said.

"Until this uncertainty is sorted out, people aren't going to make any significant decisions," Braddock said. "I'd love to have the certainty (of permits in hand and legal challenges overcome) but we don't have customers beating on our door, saying 'Why can't you do this? If you can't get it in service by this date, we'll go somewhere else."'

Opponents say they are optimistic they'll find a way to keep the project from clearing regulatory and legal hurdles.

"I think we have quite a few ways to win," said Holly Stamper, a Coos County resident whose land the pipeline route would cross and one of the people appealing the Coos County land use approval. "The only way we can lose is to quit."

Stamper contends that LNG isn't a good investment, but she also argues that the federal government's approval of the project was based on a flawed environmental impact statement.

That, too, is being challenged.

And the San Bruno explosion reminded land-owners that pipelines can go boom.

"This pipeline goes through forested areas," said Monica Vaughan, an organizer with pipeline opponent Friends of Living Waters. "There are so many concerns people have about safety; this explosion has made it that much more real of a risk."

Russ Lyon owns a 300-acre working ranch in Douglas County and said he has been concerned about the project ever since he looked at the original maps of the pipeline route, which showed it routed right through his house.

He got that changed, but he remains concerned about the rough terrain the pipeline would traverse.

"Environmentally, it seems like an insane proposal," Lyon said. "They're recommending better than 900 feet away is the safe blast zone for a pipeline. It's a lot closer than that to our house."

There are a host of safety measures designed to ensure that nothing bad happens, said Michele Swaner, a spokeswoman for Williams Pipeline Partners of Salt Lake City, another Pacific Connector partner.

Those measures include routine maintenance, monitoring, aerial flyovers, hydrotesting and "smart pigs" that run through the line and look for problems.

Derrick Welling, the company's project manager, acknowledged that San Bruno does raise awareness about the safety issue, but he pointed out that the pipeline that exploded is a half-century old.

"I don't know if that's necessarily comparing apples to apples," Welling said.

In a month that included a battle with the state and an appeal of Coos County's permit, the last thing a pipeline builder needs is more virulent opposition from the 220 landowners along the pipeline route.

Whether any of it ultimately matters, though, remains to be seen, said Michael Carrier, Gov. Ted Kulongoski's natural resource adviser.

Carrier agrees with Braddock that the market is probably the most potent force.

"The total volume of shale gas available in the continental U.S. now as compared to two years ago is just huge," he said.

- Information from The Register-Guard.