Reversal of fortune

Opponents of the proposed Jordan Cove liquefied natural gas terminal in Coos Bay thought the world market for natural gas would help them by making the project a money-loser for its backers. But energy markets have flip-flopped, and now the Jordan Cove developers are talking about sending gas the other direction.

New success with hydraulic fracturing technology in U.S. and Canadian shale formations has boosted domestic production of natural gas and driven prices down here, while prices in Europe and Asia have climbed.

A new pipeline is set to open this summer bringing gas from Wyoming to Malin, on the California border near Klamath Falls. It just so happens that the Pacific Connector pipeline, proposed to run from Coos Bay to Malin, could carry that gas to the coast, where it could be shipped to Asia and sold. That would require converting the Coos Bay facility to liquefy and export gas as well as import and gasify it.

Public opposition to the Pacific Connector line has focused largely on environmental concerns — it would cross a great deal of public land and private property, and dive beneath the Rogue River along its route. But opponents also questioned the wisdom of importing gas from abroad and sending it to California, leaving Oregon residents out of any benefit from increased supply.

Now the question is whether the U.S. should export its substantial new gas supplies, contributing to a higher-priced global market and potentially raising costs for commercial and residential customers here.

Backers say yes — the Coos Bay terminal project would boost Oregon's economy and exports would stimulate more production of shale gas, keeping prices down in the long run. That ignores the serious questions being raised about the environmental effects of hydraulic "fracking" techniques used to release gas deposits from shale formations.

Opponents — including some industry analysts — say exporting gas to Asia will make money for producers, but drive up prices for utilities and their ratepayers in the U.S.

Gas from Wyoming goes for about $4 per million British thermal units. In Asia, it can fetch up to $15 per million BTUs. The incentive for producers to export it is obvious.

What's troubling is that just a couple of years ago, investors were all set to import gas from Asia because of projected shortages here — until that proved no longer cost-effective. If shale production turns out to be too environmentally damaging to sustain, the situation could reverse again.

Meanwhile, property owners and public-land advocates in Oregon will watch, and hope the U.S. Department of Energy puts a higher value on the interests of U.S. ratepayers than on investors looking to make a fast buck.

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