Jeff Bishop, representing the Port Commission, issued a factually flawed pitch for community support for an LNG terminal while simultaneously taking a swing at Jordan Cove project manager, Bob Braddock, as well as taking pot shots at a “small, but vocal, minority of industrial development opponents”. Written as an open letter to “Port District Residents” and printed as an oddly skewed ad in today’s The World, the missive is a treasure trove of ammunition for LNG and pipeline opponents not just in Coos County but everywhere.

The letter is so rich with sparkling gems and pearlescent glimmers of shimmering truths amidst the dredge spoils of ‘beach enrichment’ obfuscation it will take several posts to cover it all. A commonly voiced complaint amongst Port observers is that the commission make fast and loose with public meeting laws. So a big question is when did the Port hold a “public” meeting directing Bishop to make these specific claims on their behalf? And how much did it cost to run a half page ad?

In another highlight, Bishop claims, “…$3 billion/$3.5 billion investment in an import LNG terminal and pipeline would generate property taxes for Coos County estimated at $12 million to $15 million per year.” This is simply untrue. The county will not receive a penny in tax for Jordan Cove terminal because it is sited in an urban renewal district (and an enterprise zone). Coos County would receive property tax revenue from the pipeline but according to County Commissioner Bob Main, “Cost, most generally, does not equal value because many economic factors will affect value in the market place”. [More on this in upcoming posts]

The real gold nugget for landowners threatened by the pipeline is the pitch to use the ‘import’ terminal as a “dual-use facility”, as in “export” terminal that will seriously undermine several key assertions of the “millions of dollars in the regulatory and permitting processes to date”. Primarily, in order to acquire land easements via eminent domain, the project must prove a public “need” and exporting demonstrates just the opposite. Bishop may just have cost Jordan Cove Energy Partners millions if they have to rewrite their original application to include exporting and goodness knows what that will do to the pipeline. [More on this in upcoming posts]

Bishop also appears to take issue with points made on this blog recently. “The claim that the proposed LNG terminal site on Coos Bay’s North Spit is unstable is also not factual. Verifiable geotechnical studies have shown the typical sand ridges comprising portions of the Oregon Coast have been there for eons…”. He goes on to say, “…the available evidence demonstrates the proposed LNG terminal can operate safely, and if constructed as engineers have planned, the terminal could survive a magnitude 9.0 earthquake”.

First, geologists have determined the magnitude and approximate dates, every 500 years or so, of mega-thrust 9.0 subduction earthquakes in this region, by measuring observable shifts in the sand and strata. For some pictorial evidence of relatively recent earthquakes, click here.

Further, Environmental Condition 52, of the FERC Final Order, dated December 17, 2009, directs Jordan Cove to “submit a final engineering design that includes detailed seismic specifications and other measures to mitigate the impacts of seismic hazards” and that the “LNG terminal design is currently at the Front End Engineering Design stage..” We believe FERC is still awaiting these engineering designs. [thanks to Jody McCaffree for this info]

Bishop’s faith based belief engineers can out-design acts of God ignores the fact engineers are mere mortals and prone to error. The expensively engineered Tacoma Narrows Bridge fell in a spectacular fashion, November 7, 1940, just four months after it opened because engineers neglected to factor in wind induced resonance. (see amazing video).

Before that, in 1928, the St. Francis Dam failed just hours after being inspected by the designer and sent 12.5 billion gallons of water flooding into the Santa Clarita Valley, north of Los Angeles.

There was the tragic O-ring failure that blew up the Space Shuttle Challenger at lift off and the flying booster rocket foam that damaged heat protective tiles destroying the Columbia upon re-entry.

The Hyatt Regency Hotel Walkway collapse in Kansas City, Missouri, the Hubble Telescope and its flawed $100 million mirror, the Hindenburg, the Titanic and Chernobyl to name a few, all were rigorously engineered by the greatest minds of their day, reviewed, received permits and more inspections and still failed catastrophically.

If these examples aren’t recent enough, consider last summer’s BP Oil spill in the Gulf. A forensic study of the BOP (blowout preventer) “giant stacks of valves installed on top of land and sea wells to help maintain control during unexpected pressure changes” determined that BOPs fail to work in a blowout.

The report cast fresh doubt on the effectiveness of BOPS and renewed calls for a redesign of the devices, including proposals for redundant pipe-cutting components and more powerful rams.
Do they work at all?

“It isn’t clear from this report that blowout preventers can actually prevent major blowouts once they’ve started,” said Rep. Ed Markey, D-Mass., the top Democrat on the House Natural Resources Committee.

DNV, the forensic firm, recommended the oil industry further study whether shear rams can “complete their intended function” and completely cut drill pipe, no matter where it is in the well hole. It said that those conclusions should be incorporated in the design of future blowout preventers and used to modify those already deployed.

Despite this knowledge the Department of the Interior and the Obama administration have issued twenty five new deep water drilling permits in the Gulf.

Bishop’s frustration with NIMBY people “who have decided their view of the future for the south coast is what must be adopted” is also felt by the targets of his tirade who feel his view of the “south coast is what must be adopted” and is as “skewed” as his letter. Far from being “anti-industrial development” most port district residents simply want a diversity of investments that show a reasonable and timely return on investment, rather than throwing all the eggs into the LNG basket.

We want sustainable industries that do not damage the environment for future generations or require the acquisition of private land by eminent domain. Jobs that come with a price tag of devalued property along a pipeline route or eliminates jobs because oyster beds and fish spawning habitat are destroyed are too expensive and will not return the investment made by the public. If a container port were financially feasible and could support itself and pay off its infrastructure costs in a reasonable amount of time, everyone would be in favor. Everyone.

Unlike Bishop, and his compliant and incurious commissioners, many port district residents have questions. Further, we would like to see the Port move out of the 19th century with its unhealthy dependence upon finite fossil fuels and into the abundant and renewable 21st century. Instead of digging its heels into a bygone era hoping to survive in a highly competitive market look beyond the traditional maritime model to exploit the unique features of the area and redefine what it means to be a successful port. The fall of great civilizations is generally attributed to the failure of leaders to adapt to the needs and pressures of a changing world.

In a later post I will address some points regarding Bishop’s claims that capitalizing on disaster struck Japan will somehow help the US economy and balance the trade deficit. (The image of a vulture picking over carrion came to mind when reading that part of the letter). Further, Bishop’s claims about “recent technological advances utilized in natural gas production are resulting in significant new volumes of gas throughout North America” probably means hydraulic fracturing… {more in a later post]

Seventh in an Occasional Series

Jordan Cove Must Explore All Market Opportunities

April 2011

To Port District Residents

In a recent story in the World (3/17/2011) concerning the Jordan Cove Energy Project, Bob Braddock’s comments were frankly disappointing given the catastrophic events in Japan and the serious challenges Japan faces in meeting its critical energy needs. Braddock expressed his opinion that exporting natural gas was “… a stupid idea.”

Mr. Braddock’s position is incredibly short-sighted when considering the state of the U.S. economy, and in light of the positive benefits that could accrue for Oregon’s south coast if Jordan Cove were to convert its proposed terminal to a dual-use facility. It is apparent that natural gas markets worldwide are changing rapidly and for very legitimate reasons.

The devastation in northeast Japan from the March 11 magnitude 9.0 earthquake and resulting tsunami is heart wrenching, and those events, combined with the crisis at the Fukushima Daiichi nuclear plan have wreaked havoc on the region’s residents, and on Japan’s economy.

However, the combined disasters have resulted in both the Japanese government and Japan’s energy sector re-evaluating nuclear power and actively seeking additional natural gas sources. The Japanese have always been resilient, and the people and the nation will recover and prosper.

Currently Japan imports about 97% of the natural gas used for industrial operations, commercial uses, power generation and residential application. There are 28 LNG receiving terminals throughout the country, with another five under construction and one in the planning stage.

Coincidentally, recent technological advances utilized in natural gas production are resulting in significant new volumes of gas throughout North America. Of course this bodes well for domestic gas availability, and given increasing international demand, there could be advantageous export opportunities, not only for North American gas producers, but these exports also would significantly help the U.S. balance of trade deficit due to continuing import volumes, while decreasing dependence on nuclear energy.

If Coos Bay harbor were the site of a dual-use LNG import/export terminal there would be significant benefit to the region in terms of long-term property tax revenue and well- paying jobs.

It must be noted that the LNG storage tank at the Sendai City Gas Shinminato terminal, at the epicenter of the earthquake and tsunami, sustained no damage from either event. There was damage to ancillary equipment at the facility, but the terminal should be back in service supplying gas to the region within four to six weeks. It is doubtful the nearby nuclear plant will ever return to service, and there are questions about whether it should.

The other important fact to note is that the engineering design and construction used for the Shinminato LNG tank is much the same as that proposed for the lower Coos Bay’s North Spit LNG terminal.

However, the community will continue to be exposed to scare tactics and misleading information from the small, but vocal, minority of industrial development opponents who have decided their view of the future for the south coast is what must be adopted, rather than having the region benefit from an economy balanced by several strong economic sectors, including revitalized maritime commerce.

The LNG sector of the international energy industry has a remarkable safety record. This record is well documented and irrefutable. The facts are there to examine, even as some people choose to distort the disclaim them. LNG transportation by marine tanker is safe and continues to increase.

The claim that the proposed LNG terminal site on Coos Bay’s North Spit is unstable is also not factual. Verifiable geotechnical studies have shown the typical sand ridges comprising portions of the Oregon Coast have been there for eons, while upper dune layers shift with the wind, the compressed/compacted sand below, and underlying sandstone and other layers are extremely stable and will easily and safely support LNG tanks and other structures. Additionally, engineering analysis indicates tank integrity will be further enhanced by the piling system that will support and tether the tanks inside a high-walled containment enclosure.

All the available evidence demonstrates the proposed LNG terminal can operate safely, and if constructed as engineers have planned, the terminal could survive a magnitude 9.0 earthquake. The Oregon Center for Coastal Margin Observation & Prediction also has modeled various tsunami scenarios and those have been presented to the community at Port Commission meetings. This computer modeling shows minimal impact to the proposed LNG site from a tsunami created by an earthquake of similar magnitude to what hit Japan’s northeast coast.

It is unfortunate that other critical infrastructure in the community has not been constructed to the same high standards. And it is self-evident that a dialogue must take place in order to deal with this situation.

After assessing the safety and security issues, the question that should be uppermost for the community is “what would be the financial benefits from multi-billion dollar infrastructure investments and what jobs will be here as a result of these huge investments?”

The Jordan Cove project and the Pacific Connector pipeline component have invested millions of dollars in the regulatory and permitting processes to date and they continue to move forward with additional permitting requirements. Now may be the time for them to consider other options, such as a dual-use facility, and the benefits that type of facility could bring to the south coast.

The estimated $3 billion/$3.5 billion investment in an import LNG terminal and pipeline would generate property taxes for Coos County estimated at $12 million to $15 million per year. Construction would create approximately 800 aggregate jobs through the 36 to 42 month construction period. An import terminal would create a minimum of 60 permanent jobs, while a dual-use facility would create at least 100 jobs. Additionally, there will be another 50 to 75 jobs created directly associated with the terminal operations.

Consider what an investment in the neighborhood of $4 billion/$5 billion for a dual-use facility would generate in property taxes.

At a recent U.S. Congressional hearing, I was pleased to represent the American Association of Port Authorities and provide testimony about the significant benefits of exports in revitalizing the U.S. economy and creating jobs. Oregon’s bay area could also benefit in the short- and the long-term if the Jordan Cove facility became a dual-use LNG terminal.

Perhaps it is time for this community to take a stand on the future in maritime commerce in the Coos Bay harbor and to tell the NIMBY faction that the marine and industrial development can and will be compatible with tourism, sport and commercial fishing, forestry and lumber manufacturing and other components of the local economy.

Marine commerce was once a driving force in the region, and there is a history of beneficial trade between the Coos Bay harbor and ports in Japan. When marine commerce helped drive the local economy there was money for schools, parks, law enforcement, better roads and public facilities, and a quality of life for everyone that was much better than it is today,

It can be that way again, if the community wants prosperity, and a vigorous, viable, multi-faceted economy.

Jeff Bishop

Chief Executive Officer

This is the seventh in a series of letters to the community from the Board of Commissioners and Chief Executive Officer of the Oregon International Port of Coos Bay. These letters will address various economic development projects and issues as they relate to the vision, mission and goals established by the Board.