All New Energy Sources are not Green—The Down Side of LNG

Expanding the variety of energy sources available to Oregonians is a good thing, right? Usually CUB would say “yes,” but there is a potential new energy source for Oregon’s portfolio that would not be good at all. The source in question: liquefied natural gas (LNG). This energy comes with a serious down side and would have numerous negative environmental and economic consequences for Oregonians.

LNG is natural gas that has been transformed into a liquid state so that it can be shipped between areas that have no overland gas pipeline connection. LNG requires terminals where it can be transferred from transport ships to land pipelines and then be transformed from its liquid state back into a gas. Washington and California have already rejected efforts to site LNG terminals in their states, so developers have turned their eyes to Oregon, hoping that Oregon will be the “weak link”. Currently, there are three Oregon sites under consideration for LNG terminals: two along the lower Columbia River and one at Coos Bay.

CUB is opposed to the development of these terminals for numerous reasons. At present, there is no market need to warrant the construction of these terminals. Further, with additional investment, these terminals could be used to send domestic natural gas to the high-priced global LNG market. This international connection would therefore not serve any local energy needs, yet could significantly drive up natural gas prices. The terminals would also bring with them serious environmental dangers, while the energy benefits of the facilities would most likely go to residents of other states or foreign nations.

LNG Is a Bad Investment

LNG terminals appear to be financially unreliable investments. Slumps in the LNG market show that demand is low and a return on investment is unlikely. In Houston, Cheniere Energy borrowed heavily to finance three LNG terminals along the Gulf Coast, but when little supply was delivered last year, the company had so much debt that it had to seriously consider bankruptcy.

Cheniere’s terminals are struggling to maintain their bottom line due to the affordability of domestic gas. No one here wants to buy high priced foreign gas when local gas is so cheap. High domestic production of natural gas has kept prices low here, while high international demand has kept LNG prices high. Thus, Cheniere is looking to export its product to foreign markets.

Not only is our current gas supply cheap, there is a lot of it. Why should we begin importing an expensive foreign fuel when we have a reliable and cheap domestic source Bernard Picchi, an energy analyst for Wall Street Access, had a “sell” rating on Cheniere for most of the year and stated that “there’s virtually no need for LNG in the United States market at this moment.”

There is certainly no need for LNG to be imported into the Oregon market. Any one of the three proposed terminals would independently import twice Oregon’s current natural gas usage, resulting in a tripling of the state’s natural gas supply with a higher-priced product. But Oregon’s demand for natural gas is not changing much. Thus, it can be concluded that this LNG must be destined for markets outside of Oregon. The Oregon Department of Energy (ODOE) reports that countries such as Japan, which has very little local natural gas, are willing to pay double the price of Rocky Mountain natural gas to buy LNG so that they can replace their purchases of higher-priced oil. If LNG terminals are built in Oregon, and US prices do not support the import of LNG, there may be pressure to turn the facility into an export terminal as an economic development strategy. While this would require additional investment, it might be the only financially viable to keep the terminal operating. Exporting domestic natural gas will put significant upward pressure on prices, which will harm consumers.

So, if these terminals are to be installed, Oregonians would have to cope with increased gas prices and environmental damages, without receiving any appreciable benefit from the new energy source.

LNG Threatens Oregon’s Environment

An LNG terminal in Oregon would require the construction of two major gas pipelines that would cut through numerous farm and forestlands, cross over 300 rivers and streams, and leave a permanent 40-mile long clear-cut in Mt. Hood National Forest. Although CUB is not necessarily opposed to new pipelines to bring additional natural gas to the Northwest from the Rockies, better care should be taken to site those pipelines. Another danger is that the proposed LNG terminals would present substantial environmental dangers through increased CO2 emissions by tankers and other vehicles.

During the past legislative session, CUB and its allies successfully stopped HB 3058, which dealt with a wide range of infrastructure issues, but also would have fast-tracked the siting of LNG pipelines. This was a victory for ratepayers and those concerned for Oregon’s coastline, farms, and forests. The issue, however, is not dead and is likely to resurface in future legislative sessions.

LNG terminals have no place in Oregon. We already have access to low-cost domestic natural gas, and imported LNG only runs the risk of increasing energy costs. CUB will continue fighting to keep Oregon a place that promotes safe, low-cost, and environmentally conscious energy development.

To keep up with CUB, like us on Facebook and follow us on Twitter!

• Share this post on Facebook.
• Share this post on LinkedIn.
• Share this post with email.

« Back