Are you part of the “silent majority” that didn’t show up at the Port of Astoria Commission hearing on Dec. 28th? Have you followed the LNG debate here in Clatsop County wondering, “What is this all about?” Or have you just thought, “Why here?” or “Why now?”

The LNG debate has split our coastal community pretty badly over the last two years. Part of the larger debate over development in our area, the LNG debate looms large over our future. What follows is some background and information on LNG to try to answer the what and why questions some of us have.

It hit me that we need a lot of education when someone in Portland asked me what LNG means after seeing a button I wear on my jacket. You mean the people in Portland, that enlightened mecca of sustainable living and environmental awareness, don’t know what LNG is? When it’s been in their weekly, on TV, and in the coast newspaper for 2 years? When the energy debate is raging across America, it seems discordant that people wouldn’t understand this acronym. But like so many other important issues, if it isn’t in your backyard, or in your face, you probably ignore it if possible. Well for us, it’s in our face, and we can’t ignore it much longer.

You may use natural gas (or “gas”) to heat your home and water, or cook your meals, but natural gas is also used to make most of our plastics, fertilizer, ammonia, hydrogen, methanol (a component of biodiesel fuel) and many other products we use every day. Graph Number 1 shows that almost a quarter of the U.S.’s energy use comes from natural gas (let’s use the acronym NG). And all the projections say that number will go up in the future. And you can see that the gas you use in your home is less than a quarter of the total NG consumption in the U.S. Most gas is used in industry, to produce steam, heat chemical reactors, and produce electricity, and as a raw material for several important chemical processes. A rising percentage of our electricity generation is done using NG, as you can see in the almost finished generating plant at Port Westward near Clatskanie. And business, like us, uses gas to heat their space and water and cook meals for our enjoyment. After the oil price shocks of the 1970s, natural gas became the fuel of choice for businesses, residences and for electricity generation. Natural gas is the engine of the “green revolution” that has substantially increased food production in the last 2 decades. Natural gas – fueling our economy at an ever-increasing pace. Only one problem – we’re running out of it.

Natural gas production in the U.S. peaked somewhere between 2001 and 2003. It’s been pretty much flat since then. Like oil, we have steadily used more and more foreign gas to keep up with demand. Right now, we import gas mostly from Canada and Mexico to make up the difference – about 15%. The federal Dept. of Energy says this will rise to over 20% imports by 2030. And Canada and Mexico are running out of gas too, and have more people in their countries to deal with all the time. So, again like oil, we need to get more and more NG from other countries outside North America. Where is this gas? Our trusty pie chart (Number 2) shows us that a significant amount (~40%) comes from the Middle East, and more than a quarter of the world’s gas reserves are in Russia. Not much from the Americas. Asian reserves are much of the “rest of the world” slice of the pie, with Indonesia, Malaysia and Australia having a large share. In any case, you can see that we need to get the gas from halfway around the world to our pipeline system here in the U.S. In some cases, gas is sent via pipeline across Asia, Europe or Africa to ports, where it is cooled to the point where it turns into a liquid, and shipped as LNG (ah, finally!) to terminals to be stored until it can be reheated to a gas and sent out through pipelines to its final destination. Most of this LNG traffic currently goes to Japan and South Korea (see Map Number 3). We’re ready to talk about LNG and why the terminals are being proposed now. Well, almost.

The last piece in the puzzle is the pipeline and storage network that currently exists in the U.S. to move NG from where it’s produced to where it’s needed, in the right amounts (see Map Number 4). Consider this network as similar to the electricity grid that distributes electricity from generating stations to you and me. Right now, the hub of this system is located in the Gulf of Mexico states that produce most of our domestic NG. The natural gas grid, like the electricity grid, is old and strained. The capacity of the system has almost been reached, and more pipeline is needed all the time to deliver the increasing amounts of gas needed to run our growing economy. In the Pacific Northwest, new pipelines are planned to satisfy our needs and those of other western states (esp. California). Some of the gas for these pipelines will come from Canada, and some of California’s gas will come from Mexico. But as we said, these sources are diminishing, so the new capacity will come from, you guessed it, LNG.

The Pacific Northwest pipelines, including the Williams pipeline that runs along the I-5 corridor in Washington and Oregon, are nearing capacity, and supplies to California are dwindling. So one of the important parts of the plan for ensuring natural gas supply continues to flow in the U.S. in the future is increasing the supply and pipeline and storage capacity to California, our most populous state, and growing. Supply to any point on the Williams pipeline, the one closest to Pacific Northwest ports where LNG could be delivered, is one way to meet this demand. Other ways are to deliver LNG to California ports and build new feeder pipelines to the major pipelines there, or to increase the flow through the network from the Gulf hub through established pipelines. An increase in pipeline and storage capacity is also required, independent of the source of the NG supply.

But the Columbia, you say, is the last place to put an LNG terminal. It’s tricky getting down the river, if you make it past the bar. Surely, there are better places for these terminals. You’re right. The companies whose business it is to supply gas to the distribution companies like Northwest Natural have proposed terminals all up and down the west coast (see references). Many of these proposals have not made it past the local vetting process. Some of them are still being considered. But the market is not unlimited. Most projections show that one or maybe two LNG terminals on the west coast are all that are feasible to supply the network into the middle of the century, when natural gas supplies worldwide are expected to decline unless new sources of NG are found in hydrates or other unconventional sources. So the race is on to site, finance and supply a terminal somewhere on the west coast. Enter the Columbia.

Like a gold rush, entrepeneurs of all types have thrown themselves into the ring. The lucky winner of this race will reap enormous profits supplying gas to most of the western U.S. through the pipeline network, especially if they can secure LNG at a set price for a contracted period of time, and sell it at market prices, which are bound to rise over time, as supply falls farther and farther below demand. On the Columbia, four proposals have been made, with two currently active (the Skipanon site has been recently revived by the sale of the lease for that land from Calpine, which went bankrupt last year, to Leucadia National, approved by a bankruptcy court in NY at the beginning of January; the Bradwood site, 20 miles east of Astoria, is in the permit application stage). In all of these proposals, pipelines would need to be constructed to connect to the Williams pipeline along I-5, and to the Mist pipeline and storage system. Additional pipeline and storage capacity may be needed to get this gas to markets across the U.S. For people in eyesight of the proposed terminals, or for those whose land would be used for pipeline construction, the reaction has been largely negative. Like other areas where these proposals have been made, concerns over safety, environmental damage, and disruption of river activity from the proposed facilities have spurred local residents to form into organizations to protest and try to scuttle the projects. Others have embraced the LNG industry as a way to increase high-paying jobs in the area, and spur on associated development that would bring more jobs and income to the counties bordering the lower Columbia, which are still recovering from the doldrums of the 80s.

Would the gas from the Columbia River LNG terminals be used to benefit the local area? Not necessarily. Currently, we get our gas from British Columbia, Alberta and Rocky Mountain gas fields, through the pipeline system described above. Gas comes from the Williams pipeline to a smaller pipeline along Highway 30 to Astoria and goes south along Highway 101 to Seaside. (Cannon Beach doesn’t have any natural gas supply.) In order to increase capacity in this area, additional pipelines would need to be built, whether or not an LNG terminal goes in. Given the current market, most NG goes to the Northeast states if possible, because prices are higher there. So where the additional NG from an LNG terminal goes is really dependent on demand (which affects price), which of course is always changing, but follows definite trends. Like electricity, NG is routed to where it needs to go at the moment, through the network. The market at this point would tend to push the Columbia River LNG terminals’ gas to California and the Northeast. But in reality, as we discussed above, it would just be part of the network, which supplies demand as needed.

This whole backdrop of world supply and demand and infrastructure has not been part of the public discussion here on the Lower Columbia. Here we are formed and forming into factions of yellow signs and red and white signs and buttons, and the fight is getting ugly. So far, local government has been supportive of the proposals for LNG terminals on the Columbia, and at least some of them are likely to be permitted and sited by the Federal Energy Regulatory Commission (FERC), which has sole siting authority for LNG terminals under the 2005 Energy Act. Will any of these terminals and associated pipelines be built? Unlikely. A new LNG terminal in the Gulf of Mexico was approved as I write this, and is due to start construction soon. Terminals in Mexico are nearing completion, and there are some proposals along the coast in California and Oregon that have some chance of approval. And even if approved, the backers of the Columbia River LNG terminals need to secure the LNG to feed them, and the market seems to be favoring oversea suppliers right now, making the economics of additional LNG supply in the U.S. more and more dicey by the day. In the end, potential investors in the construction and operation of the proposed LNG terminals and associated pipelines need to see a return on their investment, and the future doesn’t look good rightnow.

As with other commodities, the economics of NG supply and demand change rapidly. It is likely, given the fact that North American gas has peaked whereas world production is still rising, that eventually North American gas will be more expensive than LNG derived from overseas. The developers that have initiated the proposals for the Columbia River LNG terminals are struggling to acquire the permits and agreements necessary so that they will be ready should things line up in favor of going ahead with the projects. Since the regulatory climate is currently in their favor, and NG prices are relatively high, now would certainly seem to be a good time to go through the motions to secure the potential opportunity to build and operate these LNG terminals. In other countries, the government tries to figure out how best to meet demand, guiding the development of LNG terminals, for instance, to fit into the big energy picture. Here, it’s a free for all, with each proposal being studied independently. Seems silly, but the result is LNG proposals on the Columbia River.

These proposals for the Lower Columbia area are but one aspect of the global energy picture, which is expected to become quite cloudy as fossil fuels continue to decline in economically recoverable quantities. But the bottom line is that natural gas is an essential commodity that we cannot do without in our society the way it is set up now. We in this area are playing out part of a game that is seeing rapid changes in rural and underdeveloped areas around the globe. Can we handle such changes? Can the environment handle them? How can we see the connections in the energy web that will allow us to find the answers to the energy questions begging us now? Can we start to bring our communities together again, and solve these incredibly difficult problems in ways that are acceptable to everyone, and sustain our communities and others across the country and the globe? What do you say, “silent majority”, got any ideas?

Resources
•NaturalGas.org (http://www.naturalgas.org/index.asp) Information on natural gas from the Natural Gas Supply Association.
•Energy Information Administration (http://www.eia.doe.gov/emeu/international/contents.html) – Official energy statistics from the U.S. Government.
•Federal Energy Regulatory Commission: Liquefied Natural Gas (LNG) in the US (http://www.ferc.gov/industries/lng.asp) – LNG industry page from FERC’s website. Includes map of existing, proposed and potential LNG terminals in the U.S., Canada and Mexico.
•Natural Gas in North America – Should We Be Worried? (http://www.aspo-usa.com/fall2006/presentations/pdf/ Hughes_D_NatGas_Boston_2006.pdf) – presentation by J. David Hughes to the World Oil Conference, ASPO USA, Boston, Oct. 26, 2006.
•High Noon for Natural Gas by Julian Darley, Chelsea Green Publishing Company, 2004.
•LNG Controversy (http://www.dailyastorian.com/main.asp?SectionID=78&TM=11864.63) – compilation of LNG articles from the Daily Astorian.

Anti-LNG Organizations in the Lower Columbia region
•RiverVision, http://www.columbiarivervision.org/, Astoria.
•People for Responsible Prosperity, Warrenton.
•Wakhiakum Friends of the River, http://nolng.wahkiakum.info/, Cathlamet, WA.
•Landowners and Citizens for a Safe Community, http://landownersandcitizensforasafecommunity.com/, Longview, WA.
•Columbia Riverkeeper, http://www.columbiariverkeeper.org/, Hood River.

LNG Projects on Lower Columbia
•Bradwood Landing, Northern Star Natural Gas, http://www.cleansafeenergy.com/, Astoria.
•Skipanon LNG project, LNG Development Co., (subsidiary of Leucadia National Corporation, http://www.leucadia.com/), Warrenton.
•Port Westward LNG LLC (currently reorganizing and seeking funding), Clatskanie.
•Warrenton Fiber Co. (engaged in feasibility study; has until 2010 to negotiate lease changes with city), Tansy Point, Warrenton.