State utility regulators have told Gov. Ted Kulongoski that it would be worthwhile to import liquefied natural gas to Oregon, contradicting an earlier report by the state Department of Energy and giving heart to backers of three proposals to build LNG terminals in the region.

The memo from the Oregon Public Utility Commission was drafted partly in consultation with industry players in the projects -- a fact that drew skepticism from LNG opponents.

Lee Beyer, chairman of the Oregon Public Utility Commission, delivered a five-page memo to the governor on May 30 asserting that liquefied natural gas terminals in Oregon would help meet the region's increasing demand for natural gas.

Though LNG would likely be priced the same as domestic gas, Beyer wrote, some savings were possible from LNG as a result of lower transportation costs.

The memo's conclusions were tempered, but they contrasted with those of the energy department, which told the governor in early May that the state doesn't need LNG and could meet its demand for natural gas more economically and with less pollution by importing more gas from the Rockies.

NorthernStar Natural Gas Inc., which is hoping for federal approval of its proposed Bradwood Landing LNG terminal later this year, applauded Beyer's entry into the fight over the terminals. NorthernStar spokesman Joe Desmond said he was "not surprised, but certainly comforted, by the fact that he has validated all we've been saying."

Meanwhile, an environmental group scoffed at the memo. "It looked like NorthernStar wrote it," said Brent Foster of Columbia Riverkeeper.

Beyer noted early in his memo that the commission's conclusions were partly shaped by consultations with Northwest Natural Gas Inc., the region's largest gas utility, and Wood MacKenzie, an energy industry consultant. NW Natural has a substantial financial interest in pipelines and gas storage that would serve the Bradwood LNG terminal, and Wood MacKenzie is one of many consultants that NorthernStar has hired to make its case for the terminal.

Mike Carrier, the governor's natural resource policy director, said the governor's office was looking for alternative perspectives to the Department of Energy study in light of unsolicited feedback about its accuracy from entities such as NorthernStar.

Carrier said he was aware of Northwest Natural's financial interest in the terminal and Wood MacKenize's work for NorthernStar, though he said Wood MacKenzie was generally seen as a reliable source in the energy industry.

"One of the problematic parts of all this is . . . there's not a lot of nonindustry analysis going on," Carrier said.

Beyer also noted in the memo that industry analysts' conclusions may prove right or wrong -- widely so, given rapidly changing industry conditions. But he said the commission was primarily motivated by the desire to see rate stability and reliability. Calamities aside, he said, natural gas will likely be available for the foreseeable future. "The question is," he said, "at what cost?"

The commission concluded that natural gas demand would continue to grow for the next two decades, that prices would rise as domestic supplies tightened and that proposed new pipelines from the Rockies to Oregon are uncertain.

"While there is no assurance that an LNG terminal will ever be built, its presence would help in meeting demand even though it would likely be at the same price as domestic gas. There may be some small savings because of lower transportation costs," the memo concluded.

Copyright (c) 2008, The Oregonian, Portland, Ore. Distributed by McClatchy-Tribune Information Services.

Related Project
Bradwood Landing LNG
Facility Type: LNG Owner: NorthernStar Natural Gas, Inc.
Scope: New Construction Location: Bradwood, OR United States