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Kinder Morgan pulls coal project out of Port Westward, PGE breaks ground for new plant

Kinder Morgan spokesman says site north of Clatskanie doesn't work for company's coal transloading project


by: PHOTO COURTESY OF PGE - Portland General Electric broke ground on a new power plant at Port Westward near Clatskanie May 8. Earlier that same day, power company Kinder Morgan, which had been exploring options for a proposed coal export facility at Port Westward, announced it was no longer interested in the site.   Kinder Morgan, an energy company hoping to build a coal export facility in Columbia County, announced May 8 it will be looking elsewhere.

Anti-coal groups, which have campaigned vigorously against such facilities, are claiming victory. But Allen Fore, public affairs director for the Texas-based Kinder Morgan, says it was a siting issue at Port Westward, the publicly owned industrial park near the city of Clatskanie that the Port of St. Helens manages.

ForePort officials say difficult negotiations likely played a role in the company's decision. Portland General Electric, which leases 852 acres at Port Westward had made it clear in May 2012 they would not sub-lease any land to Kinder Morgan, blocking the company's first-choice location and forcing the company to explore other sites with the Port of St. Helens.

Hours after Kinder Morgan announced it was pulling the plug on a Port Westward location, PGE announced it was breaking ground on its third natural gas-fired power plant at the industrial site.

"Frankly it doesn't surprise me," said Columbia County Commissioner Tony Hyde, after he heard the news about Kinder Morgan. Fore first announced the company's decision at an early morning Port meeting and then went to the Columbia County Board of Commissioners meeting.

From the day PGE said it wasn't interested in sub-leasing to Kinder Morgan, Hyde said, "I did not see that project coming to fruition."

The news caught the port commission by surprise, said Port Commissioner Chris Iverson. But, he added, he had "just a gut feeling" the plans weren't going to go through.

"I know some of the negotiations were difficult for them," he said. "They have to work with several different players like PGE. So it doesn't totally surprise me, but it somewhat surprised me."

The company had not applied for any permits yet, Fore said. The port had signed lease option agreements with Kinder Morgan and Australian energy company Ambre Energy in January 2012. Kinder Morgan paid the port $10,000 a month and Fore says the company is current on its payments.

The money has been kept in a separate account and not been touched, she said.

"We always knew there was a chance," Miranda said. "This was an uncertainty and we knew that there was a possibility we'd have to give this money back."

Whether or not the port will get to keep the money is being determined by the company and the port's lawyers, Miranda said. The lease option outlined requirements from both Kinder Morgan and the port.

"Neither the Port nor Kinder Morgan have completely gone through all the requirements," Miranda said. So as far as the money goes, "We're not 100 percent sure."

Kinder Morgan’s coal export proposal called for transporting coal from the Powder River Basin region of Wyoming and Montana by rail to Port Westward. It was the most widely criticized of two coal export proposals due to the potential negative effect on local Columbia County communities resulting from the presence of mile-long coal trains. Ambre Energy’s proposal is to transport coal from the Powder River region by rail to the Port of Morrow facility in Boardman. The coal would then be loaded onto enclosed barges and shipped down the Columbia River to the Port Westward site, where it would be transferred to ocean-going vessels for overseas transport. The Ambre Energy proposal is still moving forward.

The loss of potential jobs is disappointing, Iverson said. According to Kinder Morgan's website, the $150 to $200 million project would have added 80 full time jobs.

Kinder Morgan estimated the “state-of-the-art” export terminal at Port Westward would have generated annual payroll of $13.6 million per year and would have paid $3.7 million annually in local and state property taxes. The terminal was also expected to result in the generation of more than 150 temporary construction jobs.

"That's $3.5 million in taxes that just left the county," Iverson said.

Port officials had said the company intended to move an initial volume of 15 million tons of coal annually with the potential to increase that figure an additional 15 million tons in a second phase of operation.

Kinder Morgan plans to continue its exploration of other possible export sites in the Pacific Northwest, Fore said. He told the port commissioners the site didn’t work for Kinder Morgan’s plans, though he added the company would entertain future business with the port.

"If there's a potential business opportunity, we'll look at it," he said, after the port meeting. "The time spent here was well worth the effort."

"We're not going away," he said. "Oregon is an important state for us."

He said neither the publicity during the company's due diligence period at Port Westward nor the pushback from PGE affected Kinder Morgan's decision. The PGE land was not the only footprint at Port Westward they explored. And as for the buzz surrounding the project, both positive and negative, Fore said it was anticipated.

"We always knew this was going to be a project that attracted a lot of attention," he said.