Judge orders Port of Astoria to renew Oregon LNG lease

Judge orders Port of Astoria to renew Oregon LNG lease
By Ted Sickinger, The Oregonian
March 11, 2010

A federal judge has ordered the Port of Astoria to renew a controversial 30-year lease with the state on a spit of land in Warrenton. The decision could boost efforts to build a proposed LNG import terminal there and a pipeline connecting it to customers in the Willamette Valley and beyond.

The Port leased 92 acres from the Oregon Department of State Lands for $38,400 annually in 2004 and subleased it to the developer of the terminal project, Oregon LNG, for the same amount. That price was based on an appraisal that assumed the land would be used for a golf course instead of a $1 billion LNG plant. Critics have long argued that the deal was too generous, and it became part of an investigation by the state attorney general into misconduct by the former port director.

When Oregon LNG went to renew its sublease on the land last year for a term of 30 years, the Port decided to extend its master lease with the state for only two years, with the option for subsequent 30-year extensions. Oregon LNG filed suit for breach of contract.

The decision by the U.S. District Court judge confirmed a November recommendation by a magistrate judge that Astoria's Port should extend both Oregon LNG's sublease and its lease with the Department of State Lands for three decades, despite the Port's concerns about getting locked into a 30-year deal if the terminal isn't built.The Port can appeal the decision to the U.S. Ninth Circuit Court.

Oregon LNG is still seeking federal, state and local permits for the terminal, but it is celebrating the decision because the land issue has put its project in limbo with other regulators and industry partners, said Peter Hansen, the chief executive of Oregon LNG.