State hints of conflict in firm's 2 LNG studies
Posted by The Oregonian January 05, 2008 08:47AM
Categories: Breaking News, Business, Clackamas County, Environment, Washington County
Oregon is skeptical of federal assurances that the terminal and pipeline reports were independently doneState officials aren't satisfied with federal regulators' steps to deal with a potential conflict of interest posed by the same environmental consulting firm working on two projects: a Columbia River terminal for liquefied natural gas and a pipeline that would ferry the imported gas to market.
They also are concerned that the Federal Energy Regulatory Commission's environmental analysis of the LNG terminal, Bradwood Landing, doesn't cover the pipeline proposal.
If both projects receive approval, the Palomar gas pipeline would carry gas from the LNG import terminal near the mouth of the Columbia River to a distribution hub south of Portland and from there on to an interstate pipeline in central Oregon.
FERC hired the consultant, Natural Resource Group, in 2005 to help prepare regulators' environmental evaluation of the terminal project -- a crucial part of the federal licensing process.
The next year, NRG went to work for financial backers of the pipeline, which now include TransCanada Corp. and Northwest Natural Gas Co., to help secure regulatory approval for the Palomar pipeline. At the time, NRG says, the Palomar proposal only connected Northwest Natural's distribution hub in Molalla to TransCanada's interstate pipeline near Madras.
The pipeline proposal, however, has since expanded to include a second section extending from the Willamette Valley to the LNG terminal, if the terminal is built.
The conflict-of-interest concern turns on whether, for regulatory purposes, the pipeline project and LNG terminal are considered related. The state of Oregon believes they are, and it wants FERC not only to eliminate any potential conflict with its third party contractor, but also consider the environmental impact of the pipeline in its analysis of the terminal.
"If these projects are related to each other, they both should have been covered," said Michael Grainey, director of the Oregon Department of Energy.
Backers of the LNG terminal and pipeline continue to argue that the projects are unrelated.
Bradwood could ship its gas to market over a shorter pipeline proposed to link it with the Williams Northwest Pipeline near Kelso, said Henry Morse, project manager for the Palomar pipeline. Similarly, the eastern section of Palomar, connecting Molalla and TransCanada's pipeline north of Madras, is still a viable project even if Bradwood is never built, he said.
"Neither one relies on the other for their existence," Morse said.
For licensing purposes, FERC is treating the projects as unrelated. In fact, Palomar's backers haven't even filed an application yet. But the agency acknowledges a potential relationship between the two. In late December, it sent a letter to NRG to express ethical concerns about its work on both projects.
"NRG's work on the Palomar pipeline could appear to provide it with a financial interest in seeing that Bradwood Landing LNG project gets approved," said the letter from Richard Hoffman, the director of FERC's Division of Gas.
Hoffman directed NRG to eliminate the potential conflict by separating staff and supervisors on the projects and segregating documentation on them.
Mary O'Driscoll, a spokeswoman for FERC, said such "Chinese walls" are common practice in corporate America.
"This is a longstanding practice in corporate circles and here at FERC," O'Driscoll said. "These are professionals. They have a blend of experience, and we know them from their past work."
Moreover, she said, FERC staff closely review every element of its environmental reviews. "Nothing goes out of here that is not signed and approved by FERC," she added.
U.S. agency critical, too
FERC issued its 600-page draft environmental analysis of Bradwood Landing, much of which NRG compiled, in August. Since then, Oregon state natural resource agencies have criticized the document as flawed and inadequate. The National Marine Fisheries Service, also critical, said FERC should include anticipated effects of the second section of the Palomar project in its analysis.
Douglas Lake, a vice president or NRG, defended the firm's work on the Bradwood Landing analysis and said no conflict existed.
"We've done work for FERC on many, many projects," he said. "We know what they want in terms of the level of detail. That's why they hire us again and again."
Lake said only one staff member from NRG, a soils expert, had worked on both Bradwood and Palomar. Meanwhile, he said, NRG had complied with FERC's request to separate project staff and documentation. The firm has even rented new space in Minneapolis so that staff working on the two projects won't interact.
State still worries
Mike Carrier, Gov. Ted Kulongoski's natural resource policy director, said the state is still concerned that NRG has the potential to be less than objective and separating the staff doesn't solve the issue.
"It's not sufficient," Carrier said. "Just a physical separation of the staff and work doesn't clearly resolve whether there's a material benefit for NRG to be working on both projects."
Depending on FERC's reaction to NRG's actions, Carrier said, the state might initiate a legal review of the situation. He wouldn't say whether the state was prepared to take any other steps.
In the meantime, the state is hoping FERC will substantially beef up its environmental analysis of the project.
"We have every indication that FERC is approaching this with a fairly light touch," Carrier said. "We'd like to see a more robust approach."
-- Ted Sickinger; tedsickinger@news.oregonian.com
No comments:
Post a Comment