Coos County could collect nearly $2 million in tariffs annually for the use of its natural gas pipeline under a contract proposed by Energy Projects Development, if the gas is sold outside the Bay Area. But Coos County could end up with nothing in fees for gas that is sold directly within the Coos Bay-North Bend local distribution system.

The Board of Commissioners Wednesday began reviewing a use agreement proposed by the Evergreen, Colo.-based company, which has proposed building the first liquid natural gas import terminal in Oregon on the Coos Bay's North Spit - an up to $150 million project.

Under the stipulations of the preliminary proposal, Evergreen has offered to pay 6.1 cents per 10 therms of gas it transports through the gas lines and guaranteed the county a $250,000 customer charge per year. The customer charge is due regardless of how much gas the company transports from the North Spit to the Interstate-5 corridor - the stated market for the gas - but the volume tariff could only be imposed once the gas leaves NW Natural's local distribution system in the Bay Area and passes across the county line.

With an estimated production of 75,000 dekatherms per day, Energy Projects estimates Coos County could generate about $1.9 million per year, if 100 percent of the gas is sold outside the Bay Area. A common household uses about 700 dekatherms per year.

"We think we can provide a revenue street to help pay off (the bond)" said Bob Braddock, project manager and one of the four partners who comprise Energy Projects Development.

County commissioners reviewed the proposal for the first time Wednesday and changes are likely to be made to the document before a final draft is approved. In the meantime, the county approved beginning research on the contract and authorized the creation of a line item in its general fund to pay for attorney fees.

Commissioner Nikki Whitty said any funds generated through its tariff should go toward settling an up to $27 million bond approved by voters to pay for the construction of the pipeline. The state also awarded Coos County $20 million in lottery funds for the development of the pipeline and an additional $4 million in economic development grants.

"Our local voters stepped up to the plate and they need to be made whole," Whitty said.

Commissioner Gordon Ross echoed Whitty's sentiments.

"For the use of this pipeline, we could negate the cost of paying this bond," he said, reiterating that the income could reduce taxes for local residents.

Energy Projects comprises Braddock, Geoffrey K. Mitchell, president and owner of Brant Energy, a Salem, N.H.-based consulting and energy investment firm; John T. Wilson, chairman of Nautilus Resources, a Denver-based oil and gas exploration and production firm; and Elliot L. Trepper, a former vice president and general manager of Bateman Engineering's oil and gas division.

Braddock has said the company's North Spit facility could attract two vessels per month to Coos Bay, each carrying about 75,000 cubic meters of liquid natural gas. The gas would be offloaded as liquid through a series of pipes and stored in a concrete-encased, nickel-alloy tank at Jordan Cove. With the ability to produce up to 200 million standard cubic feet of natural gas per day, the facility would be the smallest LNG import facility in the United States, Braddock said.

Braddock said Coos Bay is the ideal location for the construction of the terminal because Coos County's pipeline will allow access to the I-5 corridor, along the Williams-owned pipeline that runs from Grants Pass and north to Portland. He said Oregon, which receives all of its gas supply from Montana and Canada, is primed for a new source of gas and Braddock said most of the gas would be sold in southern Oregon.

Natural gas is converted to a liquid form by freezing it to negative 260 degrees Fahrenheit, increasing its density and reducing the volume it occupies by 600 times.

The company then could sell the natural gas to a distributor, which could serve the southern Oregon region. Braddock said the facility could serve 11 percent of the state's natural gas needs.

Braddock recently announced the company has reached agreement on an option to purchase 90 acres of industrial land from Roseburg Forest Products, a deal that can be executed any time within the next 21/2 years. Still, an LNG facility is at least four years away. Braddock said permitting can take as long as two years and construction could take at least an additional two years.

Energy Projects is negotiating with NW Natural and has budgeted a 3-cent-per-dekatherm fee in order to transport gas through the company's Bay Area distribution system and into Coos County's pipeline.

If the companies can't agree on a fee, Braddock said Energy Projects would consider pursuing an alternate transportation for the 5-mile stretch from the North Spit to the county's pipeline.

Energy Projects would be responsible for paying for Coos County's attorney. The funds would be repaid as part of the contract if the project comes to fruition.

Braddock said that before paying for legal fees, the company needs to determine if there will be an economic incentive for it to move forward with the venture.

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On the Net: Jordan Cove Energy Project: http://jordancoveenergy.com