Tacoma LNG plant has ‘potentially significant’ permitting issues. Opening could be delayed

Puget Sound Energy's plan to open its Tacoma liquefied natural gas plant in 2019 could be in jeopardy.

An additional environmental review of the plant ordered in January by the Puget Sound Clean Air Agency has led TOTE Maritime, which would be the plant's main customer, to delay the conversion of its ships' engines to run on LNG fuel. Permitting delays and the extra review also have caused a state commission to cast some doubt on the project.

Port of Tacoma commissioner Dick Marzano said this week the additional reviews probably have the parties holding their breath.

"I think both sides are stepping back, in a sense, waiting to see how this whole thing will move forward," Marzano said. "I don't think either side is saying 'No, we’re abandoning this.' It's just another long process in making sure that what they do complies with all the regulations."

This week, commercial shipping company TOTE Maritime announced it's delaying the conversion of its ships' engines to run on LNG. It is planning to convert to LNG to fuel the two ships' cargo routes between Tacoma and Alaska to cut back on pollution. The ships now run on marine bunker fuel, a diesel-based mix.

Despite the delay, TOTE "is fully committed to convert the Orca class vessels to LNG, the most environmentally friendly maritime fuel available," the company said in a notification to customers.

Also this week: In its response to PSE's two-year integrated resource plan, a forecasting document, the Washington Utilities and Transportation Commission questioned PSE's assertion that the LNG plant will be operational by the end of next year.

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"PSE assumes that the Tacoma LNG facility will be completed and in operation prior to the 2019 winter season and may be needed to provide gas to meet core customer peak needs as soon as the 2021 winter season," the UTC's response reads. "However, even at this later stage in the project’s development, the project has ongoing and potentially significant permitting issues."

Given that the plant isn't completed or even fully permitted, "the company's assumption that a not-yet-operational resource will be available comes with some significant risk to the company’s gas supply for core customers."

The utility needs to address what it will do in the event the LNG plant or pipeline upgrades are seriously delayed or canceled, the UTC said.

PSE spokesman Grant Ringel said the company hasn't officially offered a new time line for when the plant will be operational but acknowledged that the extra environmental review will cause delays.

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Ringel said TOTE's decision to push back the engine retrofits will align the shipping company with the delayed schedule for the LNG plant.

"This does not signal any kind of tide change for this project," he said. "LNG is a very clean fuel and it's the cleanest fuel available, and it is becoming the fuel of choice worldwide in the maritime industry."

In January, the clean air agency announced it would hire a consultant to do an in-depth analysis of the life cycle of greenhouse-gas emissions that would be caused by the proposed 8-million gallon LNG plant. That review will include an examination of where the natural gas that's piped into the plant originates. Some of the gas is expected to come from hydraulic fracturing, also known as fracking, a controversial drilling process that has drawn major opposition to the plant.

That analysis needs to be completed before PSE could get a required air permit for the project. The additional review, called a supplemental environmental impact statement, will delay the permit and could potentially change the outcome of the permit application.

The final SEIS is expected to be done by February 2019. After that, the agency will resume work on the air permit. The findings of the SEIS will inform that permit decision, said Steve Van Slyke, director of compliance for the clean air agency.

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The Puyallup Tribe has been fighting the LNG plant through permit appeals, protests and public statements.

The tribe said in a statement that it sees the recent delays as a win in that fight. Tribal officials have contended the LNG plant is bad for the environment, dangerous to the surrounding community and is being built on ancestral tidelands without consulting the tribe.

“The UTC is requiring PSE to leverage other resources for power in its long-range plan because of the uncertainty of the LNG plant’s completion," said Puyallup Tribal Chairman Bill Sterud in a statement.

“On top of that, TOTE has pushed back conversion of its two ships to LNG propulsion beyond 2021, more than two years past the original conversion time line. There is clearly zero urgency to this project, which promises more harmful impacts to our homelands, tribal members and community than benefits or jobs to the region."

Candice Ruud: 253-597-8441, @candiceruud