Pipeline promises economic bonanza (New Sawmill in Oregon. Timber!)

The Register-Guard ^ | 7/27/04 | Winston Ross

[Rebelbase]

COOS BAY - A timber company expansion, in Coos Bay?

Unthinkable. But just last month, Southport Lumber Co. announced that it had forsaken the Interstate 5 corridor in favor of its hometown.

It will plunk $15 million to $20 million into a sawmill and 65 jobs on the fertile grounds of the North Spit, the focus of the county's dreams for an economic rebound.

This wouldn't have happened if the Oregon International Port of Coos Bay hadn't agreed to run a $5.5 million rail line to the spit. But it also wouldn't have happened without the impending arrival of natural gas, company owner Jim Lyons said.

"Natural gas was one of our requirements, yes," said Lyons, even though the company doesn't currently use the resource. "It was the complete package that made the site work for us."

There, finally, was the proof to back up what economic development officials in Coos County have insisted for years: Without natural gas, the county's hopes for economic revival are slim. Without offering the "complete package," companies will sniff around the bay, lured by its deep-draft port and low-cost real estate - but ultimately decide to go elsewhere.

"They'll ask you, `Where's natural gas?' " said Martin Callery, the port's marketing director. "They'll say, `Call us when it's here.' "

With natural gas, the possibilities are endless, Callery said. That's why the county's $51 million pipe dream is a worthy endeavor, he said.

"Natural gas brings us the preferred energy alternative," he said.

Stuck in the doldrums

More than an hour from the interstate, reeling from declines in timber and fishing and often considered too grimy and industrial to attract tourists, Coos County has bounced in and out of double-digit unemployment for more than two decades.

While other coastal cities have reinvented themselves - Bandon landed a world-class golf resort and cities such as Florence have become magnets for California-fleeing retirees - Coos Bay has been stuck in the doldrums.

Before Southport's announcement, the county's argument for a natural gas pipeline was vague, its evidence anecdotal. County officials claimed that they had companies interested in the bay once the pipeline was charged with gas, but they declined to reveal any names. That left many area residents skeptical, even suspicious about possible motives for building a pipeline with taxpayer money.

But Callery and others make a case that things might be different if Coos Bay had had natural gas 10 years ago.

In the early 1990s, three key companies - Weyerhaeuser Co., International Paper Co. and Glenbrook Nickel Co. - were ready to put up millions of dollars to help Northwest Natural fund a pipeline, he said.

But uneasiness at the state's largest gas utility halted the deal. Earlier rulings by the Federal Energy Regulatory Commission meant that Northwest Natural would have to pay for gas line expansions by channeling their cost into the rates of the new customers, as opposed to the rest of the state.

"That drove the cost of natural gas delivered to the customer to three times that of anywhere else," Callery said.

Now, International Paper and Glenbrook are gone and Weyerhaeuser closed its North Bend paper mill last winter, laying off 158 workers.

If the deal had gone through, Callery said, "they might still be here. That's why we have worked so long to bring natural gas here."

The lack of natural gas also helped keep some companies from putting down roots in the first place. Local economic development boosters sweet-talked Nucor Steel for three years, hoping the company, based in Charlotte, N.C., would buy 500 acres on the North Spit and build a $400 million steel mill there.

But the company balked at assuming liability for pollution that could drift onto the site from a nearby effluent lagoon owned by Weyerhaeuser and walked out on the negotiations in 1999.

Nucor would have required natural gas, said Ron Opitz, executive director of the South Coast Economic Development Council. The company would most likely have either fronted a significant portion of the construction cost or provided Northwest Natural with enough of a consumer base to justify spending ratepayer money on the project, he said.

The deal with Nucor didn't fall apart because the county didn't have natural gas, he said, but Opitz argued that the company might have been more willing to resolve its differences had there not been an energy deficit. If the line were already in place, Nucor's initial investment would have plummeted.

"Nucor needed huge amounts of power," said Doug Fletcher, who helped found the Friends of New and Sustainable Industry, which was integral in getting the current pipeline project off the ground. "We didn't have enough infrastructure."

Also in the late 1990s, officials courted U.S. Gypsum, a company that makes sheetrock from gypsum, a naturally occurring mineral, only to watch representatives choose St. Helens, Wash., for a $146 million, 170-employee plant.

While the county's distance from I-5 was a concern, the lack of natural gas was the deal killer. The company heats gypsum with natural gas, turning it into a stucco product that eventually becomes sheetrock. It also uses natural gas to dry the sheetrock.

"Without a supply of natural gas, Coos County was eliminated early on in the selection process," plant manager Mark Ensminger said. "The cost of us having to put in our own natural gas would have been prohibitive. We use more natural gas than electricity."

Region in transition

Now, Coos Bay is well positioned for industrial growth, said Callery and others.

In March, the Coquille Tribe bought 60 acres of waterfront property - the empty expanse of the former Weyerhaeuser sawmill and plywood plant - and plans to transform it into a retail center north of its Mill Casino to attract tourists.

"I think it will change the flavor of the area," said Brady Scott, chief executive officer of the Coquille Economic Development Council, the economic arm of the tribe. "Coos County is a region in transition. The recent boom and bust of timber and fishing have just been another chapter."

In December, the governor replaced the entire Port of Coos Bay commission, and the new members hope they can work on expanding the area's maritime commerce center.

The port is a key entity in the local economy because it controls a deep waterway and owns 200 acres on the North Spit, including 165 acres zoned for industry and waiting for a new plant.

The spit - the location of the New Carissa shipwreck - also includes more than 400 acres of Weyerhaeuser-owned property and 120 acres for Roseburg Forest Products' wood chip export facility. The U.S. Bureau of Land Management owns 80 acres and the port controls about 100 acres.

The city is halfway toward raising $1.2 million to install sewer and water lines to the spit in the same underground channel as the pipeline.

Array of opportunities

It's not just big industry that could take advantage of the county's new energy source.

Fletcher, who owns several restaurants and marinas in the area, sees an array of opportunities.

There are agricultural growers who could heat their greenhouses with natural gas. The county produces more cranberries than anywhere else in the state.

The area could bring in gas turbines to fire electrical generators. Schools, the Mill Casino and the Bay Area Hospital could convert to natural gas for cost savings. Fletcher hopes that the Bandon Dunes Golf Course will use the resource as well.

"I'm quite certain that there are companies waiting for that natural gas pipeline to be here," Fletcher said.

Opitz said he's gotten two phone calls from companies checking the status of the pipeline project. Though he won't identify the prospects, he said he has firm commitments from "more than one" company to set up shop when the pipeline is completed.

He envisions a variety of businesses moving to the area, including glass production, metal workers and food processors.

"Natural gas isn't the cure-all," Opitz said. "It's not the panacea in the sky. It's just a very important piece of infrastructure to be able to offer potential industry."

Winston Ross can be reached at (541) 902-9030 or wross@ guardnet.com.

[Rebelbase]

Good news.

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good news ping.

[camle]

yes, we have no bonanzas?

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