This is the News

August 28, 2009

News Update

Today we were surprised to see the local newspaper, The Daily Astorian, publish our rebuttal to their recent editorial suggesting Bradwood secretly planned to export LNG. The only state which produces LNG for export is Alaska because of its extensive natural gas reserves, and it has done so for nearly 40 years. In contrast, Oregon imports 100% of the gas it consumes.
 
We encourage you read our response, below. In this instance, the facts speak for themselves.
 

Letter: Another viewpoint
The Daily Astorian
August 28, 2009

The Daily Astorian's editorial (“Sen. Jeff Merkley exposes the dirty little secret about Bradwood LNG") only exposed the editorial writer's misunderstanding of basic economics and how natural gas markets work.

Regarding the idea of a ban on exporting natural gas from Bradwood Landing or any other Oregon LNG terminal, NorthernStar Natural Gas is not opposed to the idea. As we have previously told several state officials, the idea of exporting LNG from an Oregon terminal is so patently absurd that we would happily sign a contract with the state of Oregon or any requisite federal authority committing that our facility would never export gas. This offer still stands.

While numerous technical, legal and physical barriers would prevent the Bradwood site from ever being used to export gas, it is impossible to justify the idea from a financial perspective. Oregon and Washington already import 100 percent of the natural gas they consume. Therefore, any gas intended for export as LNG would have to be transported over very long distances from Canada, the U.S. Rockies or Alaska to a yet-to-be-built liquefaction facility.

Moving gas such great distances adds to its transportation costs. Liquefying this gas, then transporting it via ship to a competitive Pacific Rim market with some of the world's largest conventional natural gas reserves and LNG producers would be senseless.

The basic premise behind LNG is to move natural gas from places of abundant (and easier to access) supply with little demand to places with low supply and high demand. While the U.S. has significant reserves of natural gas, much of this gas is in the form of unconventional reserves, which are much harder, more expensive and carry greater environmental risks to extract and produce than conventional gas. What's more, none of these domestic unconventional sources are near the Pacific Northwest, and there are no domestic pipelines proposed to move them here. Instead, there has been a tremendous increase in LNG production capacity worldwide, and competition among suppliers is working to keep costs stable and low.

We began the permitting process for Bradwood Landing six years ago with a view to the long-term gas market in the Northwest. We are confident that our project can deliver LNG equal to or below the local wholesale price of gas. Considering that the Northwest has no choice but to continue to import its gas from somewhere, LNG, even from Alaska, will help promote competition, diversify supply and increase reliability for the region. Northwest gas buyers will only buy LNG if it represents a savings over their existing supply options. In this regard, our interests are aligned with that of energy consumers.

It's been proven that LNG competes favorably in the U.S., even at current low prices. LNG import data for this year shows that from January through July 2009, 83 LNG cargoes have been imported into the U.S., during a time when the average wholesale price was a relatively low $4.10 per million British Thermal Units. The facts speak for themselves.

The idea that the Bradwood terminal could be an export terminal is a myth, and frankly, one of the most bizarre we've heard yet. There can be no rational discussion of domestic supply options without consideration for what it would cost to make those supplies available for purchase. The Daily Astorian's editorial writers would do well to educate themselves on understanding the cost differences between conventional and non-conventional gas supplies instead of perpetuating conspiracy theories.

Charles Deister
NorthernStar Natural Gas
Salem


Charles H. Deister || Director, Media and Government Relations || NorthernStar Natural Gas ||
(503) 949-5762 || CDeister@NSNG.com


<< Back to News