Bert Caldwell: Liquefied natural gas facilities not welcome onshore

Avista Utilities has very tentatively dipped its toe into what could become the hottest water brewed in the Northwest since Mount St. Helens erupted.

The Spokane utility was among several that last week said they might tap the proposed Pacific Connector Gas Pipeline in southwest Oregon. But as controversial as a 230-mile pipeline can be, it’s the development at one end that will really turn up the flame: a liquefied natural gas port at Coos Bay.

Liquefied gas, or LNG, could potentially replace diminishing supplies of North American gas, but the safety and security issues associated with its importation stand hairs on end. A 2004 study by the U.S. Coast Guard said gas escaping from a tanker could cause severe burns on people as far as a mile away. The extreme heat would make the fire virtually unfightable.

The tankers make inviting targets for terrorists, although none has ever been attacked.

Still, Long Beach, Calif., port authorities in January snuffed a proposed project for that harbor because of concerns over the possibility of a spill due to accident or attack. That despite support for the project from Gov. Arnold Schwarzenegger, who frets about the availability of clean-burning gas as domestic sources dry up.

The Long Beach decision may not stick. Project backers have filed suit against the port. And there are jurisdictional issues raised by the Energy Policy Act of 2005 that have not been altogether sorted out. The Federal Energy Regulatory Commission was given primary siting authority for LNG facilities, but the states retained some say on air and water quality issues.

The Long Beach and Coos Bay facilities are two of several proposed along the West Coast. Some would use abandoned oil-drilling platforms off the Southern California coast, where an explosion or fire would not endanger life or property. Four have been proposed along the Columbia River.

So far, however, the only one under construction is half way between San Diego and Ensenada on the Baja Peninsula. There are five ports on the Atlantic and Gulf coasts.

The Coos Bay facility would hit Avista in a sweet spot. The company delivers natural gas to 94,000 customers between Klamath Falls and Roseburg. The Pacific Connector pipeline would pass right through that corridor.

But Jason Thackston, Avista’s director of natural gas supply, says a show of interest in pipeline capacity is a long way from a contract.

First, he notes, LNG’s costs are unknown. It may be cheaper to take gas out of the ground overseas, he says, but after liquefying, transporting and regasifying the fuel once it lands in the United States, the cost may not be competitive with gas from domestic sources.

A new source, however, might restore some of the bargaining leverage with suppliers that Avista once enjoyed. Until a few years ago, Avista could pit suppliers from Canada and U.S. Rocky Mountain states against each other for utility business. The Canadian suppliers were able to reverse the pressure when a new pipeline connected them to the Midwest, where prices are higher.

The result has been higher prices for Avista customers.

Thackston says Avista is always looking for new gas sources. But he adds that neither he nor Avista has taken a position on the advisability of LNG importation.

Plenty of people in southwestern Oregon have. They do not like it, and they do not like the pipeline either.

Avista might take a share of the imported gas, but 90 percent would be ticketed for California, always a popular bogeyman. And, should FERC grant permits for the LNG port and Pacific Connector pipeline, backers would get eminent domain powers to obtain the necessary rights of way. Fightin’ words, again.

Fortunately for foes of the Coos Bay project, or for any of the proposed West Coast terminals for that matter, four of five FERC members are from Western states. They will almost surely get a better hearing than would have been the case with prior commissions stacked with members from other regions of the country.

They should try selling FERC on the idea LNG terminals belong offshore.