LNG terminal proposal: 2 decisions favorable

Two decisions this week have boosted the prospects for liquefied natural gas company Oregon LNG's proposal to build a terminal on 92 acres near Youngs Bay.

A federal magistrate ruled Tuesday that the Port of Astoria should extend both its sublease with Oregon LNG and its lease with the Department of State Lands for three decades, despite the Port's concerns that it might lose money if the LNG terminal doesn't happen.

Then Gov. Ted Kulongoski's office said Wednesday it won't investigate the Port's lease with the state as anti-LNG activists had requested, even though the $38,400 annual lease price was based on an appraisal that assumed the land would be used for a golf course, rather than a $1 billion LNG plant.

The company is pursuing permits for the terminal from the Federal Energy Regulatory Commission, the U.S. Army Corps of Engineers and the states of Oregon and Washington. Its CEO, Peter Hansen, says he expects approval of major permits by late 2010.

The lease price is reasonable for a piece of undeveloped land, said Mike Carrier, Kulongoski's natural resource adviser. He added that a 30-year lease extension would trigger a reappraisal of the property and a new lease price.

The company wants to build the terminal to supply natural gas to the West Coast. Terminals take supercooled liquefied natural gas from ships - storing it as a liquid rather than a gas takes far less space - then convert it back to gas for transport through overland pipelines.

Oregon LNG has sued the Port in federal court, saying the Port needs to extend both its 1994 lease with the state and its 1994 sublease to Oregon LNG for 30 years. The Port is charging Oregon LNG the same $38,400 annual lease price.

The Port argued that the leases were based on the assumption that Oregon LNG would get required permits before a lease extension came up.

However, U.S. Magistrate Judge John Jelderks said the sublease agreement gives the company unilateral rights to extend the lease without Port approval.

The Port commission will have to decide by Dec. 3 whether to follow the judge's ruling or file objections.

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Information from: The Oregonian, http://www.oregonlive.com