Of the two water lines planned to reach the North Spit and future industrial sites there, one was canceled Friday morning, the apparent victim of sticker shock.

In an emergency meeting at its Coos Bay headquarters, the Coos Bay-North Bend Water Board unanimously voted to drop the second of two 24-inch-diameter water pipes under the Coos Bay waterway. The vote, which followed a 45-minute executive session, came three days after the agency received a notice from Henkels & McCoy Inc., the construction contractor, imposing a change order that hiked the project cost by about $359,000 for the first pipe alone and predicted a similar cost increase for the second pipe, if built.

All four Water Board members were present: Chairman Dick Vigue of North Bend, Vice Chairman Greg Solarz of North Bend, Secretary Mike Helfrich of Coos Bay and Charlie Sharps of Coos Bay.

Shortly after 7 a.m., minutes before closed session began, general manager Rob Schab said the "emergency" stemmed from the relocation later Friday of a construction crane from one side of the right of way to the other as work continues on a parallel natural gas pipeline to the North Spit.

The water lines were designed to share a route with the gas line, thus cutting the building cost by up to two-thirds. Henkels & McCoy was building the pipes for NW Natural, which planned to sell the finished product to the Water Board.

Boring for the first 3,300-foot-long water pipe began in late July and at first was predicted to last only one month. But drilling problems halted work for several weeks and caused the schedule to slip through the fall and into the winter.

Drilling took place in three stages using progressively larger drill bits - first 12 inches, then 24 and finally 36. It was the second, 24-inch bit that became stuck in the channel bed and had to be removed, according to Schab.

A later design change, in which workers installed a steel sleeve over the pipe to stop frac-outs, further delayed construction, he added.

As board members prepared to vote, Vigue said the impending expiration of federal and state building permits made it unlikely Henkels & McCoy could finish its work on time. The permits, from the U.S. Army Corps of Engineers and the state Department of Fish and Wildlife, expire on Feb. 15.

The motion to stop water-line work also committed the Water Board to negotiate with Henkels & McCoy to reduce the contractor's cost hike. Construction of both water pipes originally was budgeted at $1.8 million, but Schab said company officials told him the cost overrun on a second pipe would be at least as much as on the first.

While the Water Board could have challenged the change order in court or refused to pay the increased fees, both strategies are unacceptably risky to ratepayers and the pipeline project, Schab said after the meeting. In particular, the agency's contract with NW Natural includes a "standby fee," a penalty for not working when construction crews are able to do so, of $14,000 a day.

"The major concern is the cost that would accrue through litigation, as well as a delay in the project," he said. "The board wanted to resolve these change order issues without going to litigation."

With the early end to pipe construction, the Water Board manager estimated the completed work will cost $800,000 to $1 million, with grants covering about a fifth of the expense. The final amount will depend on whether the board can negotiate a smaller price increase with Henkels & McCoy; the agency had not received the full change order as of Friday afternoon.

Afterward, Schab sought to make the best of the move, calling the second pipe mainly "an alternative" for feeding a future treatment plant and declaring one water line will suffice for the companies expected to build industrial centers on the North Spit.

"I would not see the lack of (the second) line as negatively impacting development," he said. "In fact, the installation of the pipe we do have will greatly improve that opportunity."

The Water Board must build connecting pipes at both ends of the single water line, in Empire and the North Spit, to make it functional; Schab predicted that work will begin in 12 to 18 months. No design, cost estimate or bidding schedule has been announced.