Puget Sound Energy to build Washington’s first LNG fueling station at Port of Tacoma

The Port of Tacoma could become the site of yet another natural gas plant if Port of Tacoma commissioners approve a lease Thursday (Aug. 21) with Puget Sound Energy for a tract on the Hylebos Waterway.

The 30-acre site at East 11th Street and Alexander Avenue could become a liquified natural gas conversion and storage site if PSE’s plans pass environmental reviews. The utility estimates the new facility will cost $275 million and create 150 union construction jobs over the three-year construction period. The facility would open in 2018. Once open, the plant would employ 18 workers.

The PSE facility would be the second natural gas plant signed by the port this year. The port earlier this year signed a deal with a multinational company, Northwest Innovation Works, to lease the site of the former Kaiser Aluminum smelter to build a $1.8 billion natural gas-to-methanol plant.

PSE spokesman Grant Ringel said the planned facility would serve two purposes: storage of natural gas in liquid form to be reinjected into Puget’s regional natural gas distribution system during periods of high demand such as during wintertime cold snaps, and to serve as a source of LNG fuel for transportation needs.

The plant’s largest initial customer would be shipping line Totem Ocean Trailer Express, whose two trailerships are scheduled to be converted to run on LNG fuel. TOTE’s Tacoma Terminal is adjacent to the planned PSE facility. Ringel said the ships would be served by a short pipeline from the plant.

Natural gas arriving by pipeline would be refrigerated to subzero temperatures until it liquifies and stored in an 8-million-gallon insulated concrete and steel tank. PSE already has one LNG storage facility in its network in Gig Harbor on Bujacich Road Northwest. That facility is used exclusively to supplement the supply of gas during periods of extreme demand. No conversion of natural gas to LNG is done at that facility. LNG is trucked into that storage facility from outside the Puget Sound area.

The Tideflats facility would be the state’s first “LNG filling station” creating a source of the clean-burning fuel for maritime, railroad, truck and other transportation needs.

Many transportation companies are considering converting to LNG to power their transportation equipment because the newly-abundant fuel is both less expensive and less polluting than diesel.

Abundant natural gas is available for conversion because of new oil fields in the Great Plains and elsewhere that use “fracking” technology to release natural gas and oil trapped in deep underground formations. That technology is controversial, with opponents who say it can contaminate groundwater and cause earthquakes and producers who say the methodology is safe.

The site the port proposes to lease Thursday was in part a former military reserve base the port acquired from the Defense Department after the base was closed several years ago and at other times over the last few years.

Several structures on the site will be demolished to make way for the new plant. Over the 25-year length of the lease, the port’s real estate division estimates it will generate nearly $80 million in revenue for the port.

The proposed lease contains a year-long “due diligence” period while PSE studies the site and begins permit applications. The port will charge PSE $49,725 a month during that period. When construction begins, the rental will escalate to $146,000 monthly. When the plant is complete, that rent will rise to $212,445 monthly. The port estimates PSE will also pay about $80,000 more yearly based on the volume of LNG produced.