LNG Development Co. LLC d/b/a Oregon LNG and Oregon Pipeline Co. pushed their proposed LNG export project into FERC's prefiling review.

The companies, together referred to as Oregon LNG in the July 3 filing, have been expected to begin the trip through the FERC review process for months. At the end of May, DOE granted Oregon LNG authorization to export natural gas as LNG to countries with a free trade agreement with the United States.

Oregon LNG said the export project would convert its LNG import terminal and pipeline - currently pending before FERC - into a bidirectional LNG terminal and pipeline. The liquefaction and export facilities would be at the proposed terminal site in Warrenton, Ore., near the confluence of the Skipanon and Columbia rivers. The company would build about 39 miles of new pipeline that would start at milepost 47.5 of the proposed Oregon Pipeline, cross Columbia County, Ore., and end in Cowlitz County, Wash., at a new interconnect with the interstate transmission system of Williams Northwest Pipeline GP. In a footnote, Oregon LNG said the Northwest system would have to expand to accommodate increased gas transportation to the export project, and Northwest will submit "in the near term" a separate request for prefiling for that expansion project.

"Conversion of the proposed Oregon LNG import project into a bidirectional project is the result of changing market conditions in the U.S. generally and in the Pacific Northwest specifically," Oregon LNG wrote. "While current U.S. market conditions support the development of liquefaction and export facilities, Oregon LNG's analysis of the Pacific Northwest market supports the development of a bidirectional project inclusive of some regasification capacity."

"Consistent with the current U.S. market outlook for LNG imports, Oregon LNG has significantly reduced the regasification capacity of its pending import project and proposes a bidirectional project with greater liquefaction and export capacity," Oregon LNG said. "As illustrated by the shift in the supply/demand balance since the inception of the prefiling process for the import project, markets are not stagnant. The Oregon LNG bidirectional project is designed to adapt to those changing market conditions."

Industry observers have noted that proposed U.S. West Coast LNG export projects will face competition from their Canadian counterparts.

Even before the prefiling request, Oregon LNG's bidirectional project had picked up protests. "I'm writing to urge you to protect both our environment and our economy by rejecting the Oregon LNG project," H. Gerritt Rosenthal told FERC in one of these protests.

"The terminal would entail massive dredging operations and destroy vital salmon habitat, and the pipeline would cut across Oregon forests and farmland, damaging residential property and discouraging tourism and recreation," Rosenthal wrote. "The project would also drive up demand for natural gas and encourage fracking, a dangerous and unregulated extraction method. All this will only pad the profits of Leucadia, Oregon LNG's New York-based holding company."

In order to integrate the export project with the import project, Oregon LNG said that after the prefiling review of the export project, it would submit an amendment to its October 2008 application for the import project "so that the commission may review the import project and export project (collectively, the 'bidirectional project') together." In the request for an amendment, Oregon LNG said it would ask FERC to decrease the import project's vaporization capability from 1.5 Bcf/d to 0.5 Bcf/d, eliminate one of three proposed LNG storage tanks, eliminate about 75 miles from the route of the Oregon Pipeline and modify the Oregon Pipeline to allow for bidirectional transportation.

Oregon LNG expected to file the amendment no later than the first quarter of 2013, and it will ask FERC to issue an order authorizing the bidirectional project no later than fourth quarter 2013. After about five years of construction, phase-in operations for the liquefaction trains and regasification facilities would start in the second quarter of 2017. Operation of all facilities at a total export capacity of about 1.3 Bcf/d and a total import capacity of about 0.5 Bcf/d could start in the first quarter of 2019, Oregon LNG said. (PF12-18)

Copyright 2012 SNL Financial LC. All Rights Reserved.

(Originally published July 9, 2012, in SNL Daily Gas Report.)