Thursday, May 6, 2010

Oregon LNG Developer Calls it Quits

NorthernStar Natural Gas, the prospective developer of an LNG port in southwestern Oregon called Bradwood Landing, has withdrawn its various permit applications and has filed for Chapter 7 bankruptcy liquidation.  The company blamed difficulties in the permitting process, but I think throwing in the towel mostly was based on economics.  Because of the advent of shale gas, the natural gas supply market has shifted significantly from when the port was proposed six years ago.  It is yet another example of the significant impact of shale gas on the national and international gas markets.

The Bradwood LNG port, if developed, would have been the first on the West Coast.  Looking back with 20/20 clarity, it seems a curious proposal.  The West Coast is not a large consumer of gas and it has proximity to natural gas production from the Rocky Mountains.  The port would compete against Asia for cargoes that would have to cross the Pacific to get to Bradwood.  The developer was also trying to locate the facility in an area that is environmentally sensitive.  Frankly, I'm surprised it survived this long.  There are two more prospective LNG plants on the drawing boards for Oregon.  I doubt they will fare much better than Bradwood Landing.

A 220 mile pipeline associated with the project might survive.  The line would have served Bradwood and transported gas to a larger system.  Apparently the proposed pipeline might still be viable as power plants consume more natural gas.  The only difference is that the owners might have to look east rather than west for its gas supply.

[5/10/10 UPDATE: A good article reflecting on the demise of the project.  Another article on the prospects for the other two proposed terminals and the Ruby Pipeline.]


Anonymous said...

It would be very difficult to ship LNG from Alaska to Oregon due to the Jones Act restrictions. Such ships would have to be built in the US and have American crews.

The Oregon LNG projects were primarily targeting the California natural gas market (6 Bcfd). When originally conceived, Canadian imports were projected to decline and all pipelines from the Rockies were full. Subsequently El Paso has initiated their new Ruby Pipeline project.

Les B

Robert Hutchinson said...

Good point. I forgot about that pesky old Jones Act.