Presentation to the Clatsop County Planning Commission for the Bradwood Landing LNG terminal

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Northwest Natural Gas Outlook the Potential
Role of Imported LNG
A scale representation of the Bradwood Landing
terminal and LNG carrier looking to the west
(from Puget Island, WA) toward Clifton Channel.
The Columbia River navigation channel would be
off-frame to the right.
Project overview March 2009
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About NorthernStar Natural Gas and Bradwood
Landing

• U.S.-owned and -managed, with two LNG projects
  under development, including Bradwood Landing.
• Focused on the development of domestic LNG
  terminal projects. Committed to providing a safe,
  affordable and environmentally superior solution
  to the growing need for additional natural gas
  supplies on the West Coast.
• Founded by principals who have been involved in
  the development of more than 50 energy
  infrastructure projects, including the
  development, construction and operation of nine
  LNG projects worldwide.

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What is LNG?
What is LNG?

• Liquefied Natural Gas
• LNG is natural gas, cooled to -260 F to make its
  transportation
• easier and cheaper.

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LNG safety facts

• LNG is safe
• LNG is non-polluting.
• LNG is not stored under significant pressure and
  is not explosive.
• LNG is odorless, non-toxic and non-corrosive.
• LNG is lighter than water and natural gas (its
  vapor form) is lighter than air above -160 F.

• LNG leaves no residue after it evaporates.
• LNG is a liquid that wont burn until it becomes
  a vapor, and the vapor wont burn until it mixes
  with air and becomes diluted to between 5 and
  15 LNG vapor in air. Above 15, theres not
  enough air for it to burn, and below 5 theres
  not enough LNG vapor to burn. LNG vapor clouds
  burn when they are in the 5-15 dilution range,
  but they dont explode. U.S. Coast Guard tests
  have demonstrated that unconfined LNG vapor
  clouds do not detonate, they only burn.

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Safety first an industry history

• LNG has a remarkable safety record worldwide
• More than 40 years of safe operations at
  LNG-receiving facilities
• Not a single serious injury to a member of the
  general public
• More than 40 LNG-receiving terminals operating
  around the globe. Not one has had an accident
  affecting the general public
• Many of these facilities are located in densely
  populated areas in Europe, Asia and the U.S.
• Japan Korea have imported most of their
  natural gas in the form of LNG for the past
  quarter-century.

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LNG in the U.S.
There are 113 active LNG facilities in the U.S.

• Five import terminals operate in the Eastern and
  Southern U.S.
• Everett, Massachusetts
• Cove Point, Maryland
• Elba Island, Georgia
• Lake Charles, Louisiana
• Gulf Gateway Energy Bridge, Gulf of Mexico

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LNG is not new to the Northwest Portland and
Newport, Oregon

• There are two peak-shaving LNG storage
  facilities in Oregon, which are single
  containment facilities. They provide natural gas
  during periods of peak consumer demand.
• Portland, Oregon (GASCO)
• Owner Northwest Natural
• Size 0.6 Bcf
• Year built 1969
• Located five miles north of downtown Portland.
• Newport, Oregon
• Owner Northwest Natural
• Size 1.0 Bcf
• Year built 1979
• Located on a point of industrial land that juts
  into Yaquina Bay.

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• Supply Demand

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North America National Gas Demand
77.4 Bcfd
Source Wood Mackenzie
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US National Gas Demand
Source Wood Mackenzie
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Imported Gas Remains Important to Supply Mix

• LNG imports increase at a rapid pace in the first
  decade of the projection
• However, the future direction of the global LNG
  market is one of key uncertainties in the AEO
  2009 reference case

Source EIA, 2009 Early Release
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The Pacific NW needs additional supplies of
natural gas

• There have been nine independent assessments of
  regional and North American gas supply and demand
  within the past two years. Their conclusions the
  region needs natural gas supplies

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The facts of PNW gas supply

• The Pacific NW imports 100 of its natural
  gas. Gas comes
  from British Columbia,
  Alberta, Wyoming, Colorado
  and New
  Mexico.
• 2/3 of the NWs natural gas comes from
  Canada. Canadian
  supply is declining,
  while Canadian demand is
  increasing, severely diminishing export
  capability to the U.S.
• 1/3 of the NWs natural gas comes from the U.S.
  Rockies. The Rockies Express (and other new
  pipelines) will allow diversion of that gas to
  higher-priced east coast markets beginning in
  2009.
• Although more gas and wind power plants are being
  built in the region, most of the new power
  actually being generated is coming from gas.

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Forecast of Canadian supply
Canadian supply expected to drop significantly
due to production decrease and growth in Canadian
domestic demand driven by tar sand oil production.
Projected Decrease of Approximately 4,600 MMcf/d
from 2006 to 2025
Forecast
Source EIA
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New pipeline will carry gas east
Supplies in the Rockies will have access to east
coast markets - potential for 2.5 Bcf/d total
capacity on Rockies Express
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More gas-fired power plants and wind turbines are
being built
Source NW Power and Conservation Council
Since 1999, more gasfired plants have been built
in the Northwest. This table represents the name
plate energy capacity of new power plants
brought on line.
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but gas is providing more actual power
Source NW Power and Conservation Council
Among new power plants, gas is providing most of
the actual power.
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Regional gas utilities agree on supply need

• In January 2008, the CEOs of NW Natural, Cascade
  Natural Gas and Avista Corp. wrote Gov.
  Kulongoski on the pressing need for additional
  supplies of natural gas. They cited the following
  facts
• Since 2000, NW regional wholesale natural gas
  prices have risen 200.
• Gas is the only immediately available and
  reliable way to meet our regions growing demand
  for electricity, while reducing greenhouse gas
  emissions.
• An LNG terminal in Oregon would increase access
  and improve long-term reliability of natural gas
  supply and diversify supply sources to help keep
  costs competitive.

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Pacific Northwest Gas Demand - Increasing

• .while PNW demand continues to increase

Source Northwest Gas User Association
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Oregon and Washingtons growing demand for
natural gas supply and demand

• Customer Growth
• According to utility projections, the number of
  Oregon utility core market natural gas customers
  will grow over the next 20 years at an average
  annual compounded rate of 2.4, with a cumulative
  increase of 66.2 or by 478,674 customers through
  2028. 
• Washingtons utilities project the number of
  their core market natural gas customers to grow
  at an average annual compounded rate of 2.25,
  with a cumulative increase of 55.2 or by 626,962
  customers over the same period.
•  
• Demand Growth
• Utility core market annual demand over a 20-year
  forecast period is expected to experience
  cumulative increases of approximately 40 - 50 in
  Oregon and Washington, representing an additional
  demand of roughly 30 Bcf in Oregon and 66 Bcf in
  Washington.
• (Based on utility Integrated Resource Plans
  already filed with Oregon and Washingtons public
  utility commissions )
• Over the same period, peak day demand in Oregon
  and Washington is forecasted to increase by 35
  and 50, representing a cumulative increase of
  0.35 Bcf/d and 0.78 Bcf/d, respectively.  

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Oregon and Washingtons growing demand for
natural gas looming shortfalls

• The demand and supply dynamics on the previous
  slide will result in the following projected
  shortfalls in available natural gas unless
  additional supplies are made available to the
  region.
• Supply Shortfalls
• All of Oregons and Washingtons natural gas
  utilities conclude that currently committed
  supply and capacity resources are inadequate to
  serve future peak day natural gas demand. 
• NW Natural foresees shortfalls as early as the
  winter of 2008-09. 
• Cascade Natural Gas projects shortfalls on its
  system in the 2010-11 winter heating season.
• Avista states that it will face peak day
  deficiencies in Oregon by the 2011-12 winter and
  in Washington, by the 2014-15 winter heating
  season.
• Puget Sound Energy concludes that its currently
  committed resources will become inadequate to
  serve its peak day (Washington) natural gas
  requirements beginning with the 2011-12 winter
  heating season. 

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PNW Supplies Remain Flat
WCSB
Rockies
Source Wood MacKenzie

• WCSB exports are projected to decline at a
  similar rate to Rockies production increase.
• The Pacific Northwest will have no increase in
  natural gas supply sources...

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Natural Gas Volatility and Price

• Natural gas prices have experienced unprecedented
  volatility

Source NYMEX

• Diversity of supply whether through drilling
  (unconventional or conventional) or through LNG
  imports throughout the US will ensure that both
  prices and volatility remain low.

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Direct supply will help lower costs

• No one will pay higher prices for imported LNG.
  The price in the local market is set in the local
  market. Whatever the cost of producing and
  shipping LNG, the supplier will have to sell at
  local prices.
• Additional supply options will help keep prices
  down.

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US production remains steady
Henry Hub

• Robust unconventional gas production serves to
  hold overall production steady as conventional
  production declines
• Alaskan pipeline is a wildcard post 2020
• Prices projected to increase as a result of
  higher exploration and development costs and a
  requirement for increased production

Source EIA, 2009 Early Release
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Cost Curve Based on 2008 Costs and Volumes
64.2 Bcfd Demand equals 5.00/MMBtu HH gas

• Per 2009 EIA AEO Early Release, US demand was
  64.2 Bcfd in 2008

Source Wood Mackenzie
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Shale gas can fill immediate supply gap, but at a
higher cost
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LNG can help meet ORs energy needs

• Liquefied Natural Gas must be considered in the
  context of diversifying and shoring up energy
  supplies for Oregon and the Pacific NW and the
  potential for LNG to help reduce over-reliance on
  other sources of energy, especially coal and
  hydropower which have other environmental
  impacts. LNG must also be considered in light of
  its potential to serve as part of an essential
  bridge to a future energy portfolio that is
  more dependent on renewables. In this context,
  all sources of clean energy should be considered
  if they have potential to increase supply, assure
  supply and price stability and reduce reliance on
  foreign energy.
• - Gov. Ted Kulongoski, Memo on LNG, Nov. 16,
  2007, pgs 1-2.

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LNG is far cleaner than coal

• On a life-cycle cost basis, LNG has less than
  half the CO2 content of domestic coal and only
  slightly more than domestic natural gas. In
  addition, unlike coal, there are no mercury
  emissions from the burning of natural gas.

Total Greenhouse Gas Emissions Summary (Tons CO2
per Megawatt hour)
Source Comparative Life-Cycle Analysis of GHG
Emissions from Select Hyrdocarbon Fuels, PACE
Global Energy Services, May 2007.
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An LNG Terminal could provide significant savings
to gas consumers

• NW Naturals modeling shows that an LNG terminal
  could save consumers hundreds of millions of
  dollars in transportation-based cost savings from
  LNG supply.

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• Bradwood Landing

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Oregonian endorsement

• On June 15, The Oregonian published an editorial
  calling for the Bradwood Landing project to
  proceed.

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Bradwood Landing terminal location
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Bradwood Landing pipeline 36.3 miles
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Bradwood Landing key data
A scale representation of the Bradwood Landing
terminal looking to the Southeast from the
western tip of Tenasillahe Island showing Clifton
Channel. The Columbia River is at the left.
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Why Bradwood is an excellent site

• Bradwood offers a sheltered, deep water port and
  requires a shorter pipeline to connect with
  existing natural gas lines.
• Shorter 36.3 mile pipeline allows for faster
  construction time and lower transportation costs
  to move gas to OR and WA consumers.
• The site has a 150 year history as an industrial
  site including use as a lumber mill, mill town
  and deep water port.
• There is no tsunami risk.
• There is no risk of contamination to human or
  aquatic life from turning basin dredging because
  no toxins are present.
• It is a remote site that will not impact other
  existing civic infrastructure such as airports or
  cities.

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Bradwood Landing1856-1965 Industrial History
BELOW Bradwood today viewed from the air looking
west. The oval represents the area that would be
used for the Bradwood Landing terminal.
ABOVE Bradwood was an industrial site from
1856-1965. The site housed a lumber mill, company
town and deep water port. Pictured above in 1954.
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BWL is designed to deliver gas to PNW

• We contracted an independent study to examine
  where the physical gas flows from our terminal
  will go.
• At an expected terminal utilization of 40
  (industry average)

• Oregon consumers would receive on average 73 of
  all LNG delivered to consumers from the Bradwood
  facility.
• Washington would receive 26 of all LNG
  delivered.
• Less than 1 on average would go to Idaho,
  Northern California and Nevada combined.

Source An Independent View of Markets Served by
Bradwood Landing, Wood Mackenzie, July 2007.
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BWL is designed to deliver gas to PNW

• We contracted an independent study to examine
  where the physical gas flows from our terminal
  will go.
• At an expected terminal utilization of 100

• Oregon consumers would receive on average 50 of
  all LNG delivered to consumers from the Bradwood
  facility.
• Washington would receive 30 of all LNG
  delivered.
• 20 on average would go to Idaho, Northern
  California and Nevada combined.

Source An Independent View of Markets Served by
Bradwood Landing, Wood Mackenzie, July 2007.
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River traffic and the U.S.C.G. Waterway
Suitability Report for Bradwood Landing

• The Columbia River is the main import and export
  highway for many products Oregon and Washington
  consume, grow and manufacture. It is vital to
  commerce.
• Vessels carrying more volatile cargoes than LNG
  (gasoline, diesel, anhydrous ammonia, fertilizer
  and chemicals) are routine on the Columbia River
  and are not subject to the same safety and
  security measures as LNG vessels.
• U.S. Coast Guard determined that with
  improvements to navigation, safety and security
  the Columbia River is suitable for LNG carriers.
• Bradwood will pay for all safety, security and
  navigation upgrades.
• LNG carriers will not adversely affect river
  traffic. LNG vessels will transit the river much
  like other deep draft vessels on the river today.
• USCG to routinely allow other vessels to
  transit through the safety/security zone.

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LNG carrier traffic in context

• At an estimated maximum of 125 LNG carrier visits
  per year, deep draft vessel traffic on the
  Columbia would still be lower than it has been.

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LNG ships among the strongest in the world

• LNG carriers are double-hulled, and their
  cryogenic tanks provide a third level of
  containment.
• Since the first LNG cargo was transported by ship
  in 1959
• More than 48,000 cargoes of LNG have been
  delivered.
• There has never been a cargo containment failure.

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Large ships on the Columbia River today
LNG carriers are similar in size to other large
deep-draft vessels that transit the Columbia
River today.
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In-transit safety/security zone

• Safety/security zone defined
• The area surrounding an LNG vessel that another
  vessel will need permission from the Coast Guard
  to enter
• 500 yards while the ship is in transit
• The safety/security zone does not apply to
  swimmers, does not extend onto land, nor will it
  affect Clifton Channel.

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At berth safety/security zone
200 yards while the ship is berthed (access to
Clifton Channel will not be blocked) 50 yards
at the facility when no ship is present
The Coast Guard stated in its Waterway
Suitability Report that it expects to grant
routine permissions to enter safety/security
zones to other commercial vessels, fisheries and
recreational river users. Waterway Suitability
Report for Bradwood Landing LNG, USCG, February
28, 2007, page 1.
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Bradwood Landing will be a national model of
environmental sustainability

• Avoid Minimize adverse impacts of the project
  to the greatest extent feasible shrinking the
  facility footprint, protecting sensitive areas,
  designing new solutions.
• Compensate for unavoidable impacts with
  mitigation that creates verifiable net benefits
  (monitored by FERC and NOAA).
• Enhance, beyond regulatory requirements, fish
  productivity and the Lower Columbia ecosystem and
  support sustainable principles and processes.

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Avoidance screened water intakes
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Mitigation example Hunt Creek
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Svensen Island purchase
As part of our mitigation plan, Bradwood Landing
has acquired Svensen Island and will breach the
remaining dikes to return the lower third of the
island to its original salmon habitat.
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Mitigation example wetlands
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Above and beyond BWLs Salmon Enhancement
Initiative

• BWL is committing 59 million to the SEI to
  ensure the project significantly
  improves ecosystem function and salmon
  productivity in the Lower Columbia
  River.
• Bradwoods voluntary Salmon Enhancement
  Initiative represents the largest private
  commitment to improve watershed health on the
  Lower Columbia River.
• Using NMFS own methodology to model the benefits
  of the SEI, the program is projected to improve
  salmon survival by 1.77 million juvenile fish per
  year. This would represent 50 percent of NMFS
  own survival improvement target for ocean-type
  fish, such as salmon.

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Voluntary and binding SEI (fish survival)
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Voluntary and binding SEI (acres protected)
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Local economic impact taxes and jobs

• Bradwood Landing will pay 7.8 million annually
  in property taxes, making it by far the countys
  largest taxpayer. We are not asking to be
  included in an enterprise zone to lower our
  taxes.

Annual wages

• BWL will infuse approximately 112 million into
  the local economy during construction, and
  approximately 18 million a year during
  operations.
• BWL and its associated maritime jobs (tug crews)
  will employ 65 people at an average salary of
  60,000 a year with benefits. The construction of
  BWL will create 2 million man hours of work for
  three years (peaking at 450 jobs).

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Local economic benefits

• We will seek to maximize opportunities to
  purchase locally.
• We will use local skilled union labor to build
  the facility. We have signed project labor
  agreements with the Oregon Building Trades.
• We have partnered with Clatsop Community College,
  Lower Columbia Community College, and organized
  labor to train local workers to fill skill gaps.
  We have given scholarships to encourage women and
  Clatsop residents to learn the specialized
  welding and other skills we will need to build
  and operate our facility.

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BWL has widespread support

• To date, more than 1,200 area citizens have filed
  letters of support with FERC and/or the Clatsop
  County Commission in support of the Bradwood
  Landing LNG terminal.
• Project supporters include State Rep. Brad Witt
  (in whose district Bradwood is located), NW
  Natural Gas, the Columbia River Pilots, the
  Columbia River Steamship Operators Association,
  and dozens of local businesses including other
  shippers.
• Bradwood Landing is the only Oregon LNG project
  endorsed by
• - Oregon AFL-CIO
• - Oregon Machinists Council
• - Washington Machinists Council
• - Carpenters Local 1707
• - Columbia Pacific Building Trades with its 32
  affiliate trade and craft unions
• - International Longshore and Warehouse Union

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Significant amount of un-contracted supply by the
time BWL operational
By 2015 20 Bcf/d of liquefaction capacity will
be available not including divertible cargoes.
Source Wood Mackenzie 2008
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More information

• Bradwood Landing
• 905 Commercial St.
• Astoria, OR 97103
• [phone]
• www.bradwoodlanding.com

Bradwood Landing as it appears today looking West
across Clifton Channel.
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