State regulators have denied the proposed Jordan Cove liquefied natural gas (LNG) pipeline a needed water quality certificate.

The move announced Monday by the Oregon Department of Environmental Quality deals another delay to the 229-mile pipeline project that would connect the Klamath Compressor Station east of Klamath Falls to infrastructure near a seaport terminal at Coos Bay‘s North Spit.

The state agency’s decision was made “without prejudice,” meaning the company backing the pipeline, Pembina Pipeline Corp., based in Canada, could rework its application and try again.

A Southern Oregon environmental group fighting the project characterized the water quality certificate denial as a “really big move in the right direction for Oregon.”

“This is a very serious blow to the Jordan Cove LNG project,” said Allie Rosenbluth, campaigns director for Rogue Climate.

Pembina has been pushing the Jordan Cove project for more than a decade, seeing an opportunity to move liquefied natural gas from the interior of the United States to energy-hungry Asian markets via ocean shipping.

Pembina representatives did not reveal their next move.

“Pembina’s management team is working to better understand this decision and its impacts and will communicate updates when appropriate,” spokeswoman Tasha Cadotte stated in an email message.

Cadotte declined to comment beyond the written statement.

The DEQ decision came in response to a deadline set by the U.S. Army Corps of Engineers. A recent court decision had called into question an extension of the deadline to Sept. 24, so the state agency kept to the original May 7 deadline to preserve Oregon’s right to review the project’s water quality impacts.

Some observers expect Pembina to rework its application and try again to get DEQ approval. It wouldn’t be the first time the Jordan Cove project team has overcome obstacles.

“They’ve had a lot of things denied, but they come back,” said Hugh Link, director of the Oregon Dungeness Crab Commission.

The commission represents the 423 permitted crab boats on the Oregon Coast, and has pushed for safety corridors around any ships that would use Jordan Cove. Crab boats and tankers alike would have to cross the Coos Bay bar at slack high tide.

“We want them to be able to maneuver safely through the Coos Bay bar,” Link said. “When they’re going out or coming in, we don’t want them to have to wait in bad weather.”

The commission has not taken an official position on the project.

Pembina says the $10 billion project would create 6,000 construction jobs at its peak and would generate property tax revenues of $60 million a year to southern Oregon counties and $50 million to the state.

The Port of Coos Bay has backed the project.

“We see it as something that can be really transformative for this area as far as bringing back economic development opportunities,” spokeswoman Margaret Barber said.

Jordan Cove has alarmed environmental groups, who believe the project would become Oregon’s largest contributor of greenhouse gas emissions as climate change worsens. The pipeline also threatens coastal rivers and the property rights of some landowners who could face eminent domain, Rosenbluth said.

DEQ’s denial was backed by a 209-page report analyzing the proposal’s effects on water quality. The agency cited concerns about construction of the pipeline and associated roadways affecting water temperature and sediment in streams and wetlands, and the risk of drilling materials entering the Coos Bay estuary.

Pembina proposes to dredge a 22-acre area to connect a slip that would be built to the navigation channel. The 36-inch-diameter pipeline would affect about 4,950 acres during construction and 1,400 acres permanently, according to the agency.

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The Port of Coos Bay is preparing to study the feasibility of building a marine terminal served by rail at the bay’s North Spit.

The port last week received a $50,000 grant from Business Oregon to study the feasibility, infrastructure needs and cost of building the terminal.

Port officials point to a need for another West Coast port to ease congestion at the ports of Tacoma, Seattle, Los Angeles and Long Beach, California.

“The state needs to have multiple outlets and inlets for cargo to travel through,” said Margaret Barber, spokeswoman for the Port of Coos Bay.

The port owns approximately 400 acres of property zoned for marine industrial use on the North Spit. The port has a rail spur that connects with the Coos Bay rail link and allows access to Union Pacific’s Eugene yard.

Nearly 40,000 40-foot containers of agricultural goods from the mid- and southern Willamette Valley, southern Oregon and the Oregon Coast travel to the ports of Seattle and Tacoma to be exported, according to a study commissioned by Business Oregon and conducted by ECONorthwest. That increases truck traffic on Oregon’s highways, port officials said.

The port of Coos Bay could offer faster turnaround times and new technologies to a niche market, officials said.

“As a smaller port, the Oregon International Port of Coos Bay has the capacity to grow, but is not locked into legacy technologies and old ways of operating,” port officials stated in a news release. “Our port can be nimble and responsive in a way that the large ports may not, handling a variety of cargoes.”

The port offers access to the federal navigation channel. Port officials are working with the U.S. Army Corps of Engineers to deepen and widen the channel from 37 feet deep and 300 feet nominal width to 45 feet deep and 450 feet wide.

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Nine 100-year-old railway tunnels on the southern Oregon coast will be structurally improved as part of the final package of federal FAST Lane infrastructure grants.

The Port of Coos Bay will add $550,000 to $11 million in federal funding and $8 million in Oregon Lottery bonds to rehabilitate the tunnels along the 82-mile section of railway connecting Coquille and Eugene. The longest tunnel targeted for improvement is nearly a mile long. The tunnel rehabilitation project will also include drainage work along the line.

An information sheet provided by the port states much deferred maintenance existed when the port assumed ownership of the tunnels within the past 10 years. Several of the tunnels are reinforced by their original timber supports.

The FAST grant was requested by Rep. Peter DeFazio, the ranking democrat on the House Transportation Committee.

The FAST Lane infrastructure program was folded into a program called INFRA by President Donald Trump.

The work is expected to begin this quarter and conclude in two years.

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Elise Hamner saw 22 freight cars loaded with plywood go through Coos Bay on Tuesday.

“It was a beautiful sight,” she said.

Hamner, the communications director of the Port of Coos Bay, said it shows that the Coos Bay Rail Link is done, and that trains are once more hauling wood, steel and other cargo between Roseburg and the Oregon Coast. Hamner said the first train moved along the fully restored 134-mile rail line on Monday.

“We, as a community, have done the impossible,” Port of Coos Bay CEO David Koch said. “We’ve accomplished what so many naysayers said couldn’t be done.”

Port officials bought the rail line in 2007 for $17 million and launched into the backlog of maintenance projects that had caused the Central Oregon & Pacific Railroad to close the track in 2003.

The loss of rail service was devastating, Hamner said. American Bridge, a steel fabricator in Reedsport, had 100 employees in 2003. After the Central Oregon & Pacific Railroad abruptly shut down because of safety concerns, American Bridge had only 10 employees and was barely limping along.

The railway reopened partially in October 2012, and after a year of restored rail service, American Bridge and other companies welcomed the relief. However, the railway was not fully restored until this week.

That’s when workers for Billeter Marine and Scott Partney Construction in North Bend completed the final step of repairing two critical wooden trestles to open the remaining 20 miles of rail line to Coquille.

“Moving product by rail directly out of Coquille can eliminate up to 18 truckloads per day of material being shipped to another mill, where it then is loaded on a railcar,” Roseburg Forest Products transportation director Jeff Brandt said. “This will not only allow us to be more competitive by reducing our costs, but it will benefit the community and environment by reducing highway traffic and emissions.”

The company also moves wood chips along the rail line to its terminal on the North Spit of Coos Bay. The company is one of 11 manufacturers and agricultural producers that have transported wood products, steel, chromite ore and organic cattle feed by rail since 2011.

The Coos Bay Rail Link now employs 12 people, with a total payroll exceeding $500,000, Hamner said.

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An answer to meeting America’s growing energy needs could soon be blowing in the winds along the Oregon Coast.

Seattle-based Principle Power, a renewable energy technology developer, is working to deploy a floating wind turbine system in deep water off the coast of Coos Bay. The WindFloat system derives from technology used on floating oil rigs and looks to tap into an energy source that could be a game changer for the town.

“The floating platforms open up whole new areas to development that were previously unacceptable,” said Kevin Banister, vice president of Principle Power.

Specifically, Principle Power is looking at ocean real estate 10 to 15 miles from shore, where the sea floor drops dramatically and wind resources are more consistent. The platform technology lets the company place 300-foot-tall turbines in water up to 1,640 feet deep; most existing ones are found in shallow water.

It’s an out-of-sight, out-of-mind approach to power generation. The company for the past year has tested a deep sea turbine, off the coast of Portugal, that has generated 3.5 gigawatt-hours of electricity.

The Coos Bay turbine could perform for 20 years and generate as much as 30 megawatts annually. But Principle Power also envisions constructing at the port of Coos Bay a production-and-launch facility that could send WindFloats around the world.

Banister said Japan, for instance, is hungry for renewable power solutions to replace nuclear resources in the wake of the 2011 tsunami. The fact that Japan is a mountainous island nation surrounded by deep water also makes WindFloats ideal.

The U.S. government sees huge potential for the technology. Principle Power this month was one of seven companies across the nation to receive federal funding for offshore wind power development. The Department of Energy gave each project $4 million to complete engineering and permitting. Within the next few years, the DOE will select three of the seven to receive more money for construction. Each of those companies could receive up to $47 million over four years, subject to congressional appropriations.

According to a new report by the DOE, offshore winds are able to generate 4,000 gigawatts of clean electricity – four times the nation’s current total generation capacity. Additionally, such an industry could support 200,000 manufacturing, construction, operation and supply chain jobs, and entice $70 billion in annual investments through 2030.

Principle Power’s objective is to break ground in 2016 and be up and running with the first turbine the following year. Banister said the biggest obstacle will be permitting.

“We’re proposing to do something that’s different on the West Coast,” he said. “That hasn’t been done before out here and we just need to make sure we work hard and closely with the (various) agencies so that we can do this (within the planned) time frame.”

The fate of Principle Power’s project is tied somewhat to the fate of the $7.5 billion Jordan Cove project, a liquefied natural gas export facility that Canadian company Veresen Inc. hopes to build in Coos Bay.

Elise Hamner, communications and community affairs manager for the Port of Coos Bay, said the Jordan Cove team would pay for 85 percent of the cost to develop an access channel to the berthing area that Principle Power would need to launch its floats. Principle Power would place its facilities on port-owned land, and the port and Principle Power together would be responsible for the remaining 15 percent of the Oregon Gateway Marine Terminal Complex.

Hamner said the port is trying to set up a deal where the Jordan Cove team would purchase the power from the first WindFloat for use in its power-intensive natural-gas-liquefaction efforts.

The Jordan Cove project is in the permitting process; its team is hoping to begin construction by 2014. Opponents, leery of potential environmental and safety impacts, have formed a coalition called Citizens Against LNG. Hamner said she is not aware of any opposition to the wind project.

“We are right at the north end of primo wind resources; they are unsurpassed anywhere on the West Coast,” she said. “We have a good marine services fleet that can service this type of equipment in the ocean. There are just a lot of things that line up to make it a good spot here at Coos Bay.”

Another potential conflict for Principle Power may come from commercial fishermen who operate in the deep waters where the company hopes to anchor. Banister said he has worked closely with local fishermen to navigate those concerns.

On the horizon, Banister sees WindFloats dotting the Pacific from Coos Bay to Northern California. Such a system could help alleviate transmission bottlenecks between Oregon and California.

Principle Power’s budget for the first phase of the project is $4.8 million (including the DOE’s grant), but Banister said that will go up as the project progresses. He said it is too early to talk about the total economic impact, but noted that construction and operation of a WindFloat facility would be considerable – construction of the underwater power cables that transmit electricity from the turbines to shore can cost up to $2 million per mile.

“Hopefully this will be the first project among many as we think this industry is going to evolve out here,” he said.

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When American Bridge Manufacturing opened for business in Reedsport in 2003, the steel fabricator had 100 employees.

Then the Central Oregon and Pacific Railroad connecting the southern Oregon coast to the Willamette Valley abruptly shut down because of safety concerns. Within four years, American Bridge had only 10 employees and was barely limping along.

Now the company is back on track – literally.

Officials at the Oregon International Port of Coos Bay bought the railway in 2007 for $17 million and launched many of the backlogged maintenance projects along 134 miles of track. Service on the railway was restored in October 2011, and American Bridge and other companies are taking advantage. However, the train is, well, moving slowly.

“You don’t shut down a mode of transportation abruptly for five years and bring it back immediately,” said Brian Paul, the plant manager at Coos Head Forest Products. “It’s getting there. It’s not going to happen overnight.”

Port of Coos Bay officials spent $31 million to rehabilitate the tracks, said Elise Hamner, a spokeswoman for the port. One of every four railroad ties – 90,000 altogether – were replaced, and 57,000 tons of gravel were brought in.

However, many deferred maintenance projects remain; Hamner estimated that the rehabilitation of the railway is only two-thirds finished. Port officials and their partners in state and local government, as well as regional businesses, believe as much as $90 million more may be needed to completely bring the railroad up to speed.

For now, trains can travel on the railroad at only about 10 mph, said Tom Foster, the general manager of what is now called the Coos Bay Rail Link. Speeds are limited because of the condition of the tracks. Trains can occasionally go as fast as 20 mph, but that’s only on a limited stretch of rehabilitated track.

“It depends on the number of ties on the track and other factors,” Foster said.

Even at 10 mph, Hamner said, rail service in the region is vital.

“We have a deep-draft harbor,” she said. “You can’t have maritime commerce without rail service. There are hundreds of jobs tied to it.”

Fred Jacquot, sales manager for American Bridge, said having an empty railroad between 2003 and 2011 certainly proved the importance of rail service.

“We have highway, water and railway access here,” he said. “Of those, rail is the most important. We were sending product by rail to Portland and then shipping by truck.”

That was the problem, Paul said.

“That was the tricky (part) because that’s what everyone else was doing,” he said. “Everyone was competing for the same trucks.”

American Bridge has not been able to rehire all of the 90 employees who were laid off; however, it now has 50 workers.

“Rail service has allowed us to be more competitive, but the market is still way, way down.” Jacquot said.

For , restored rail service has been “a foot in the door” for expansion into nearby states, Paul said.

“The railway service in this region is vital,” he said. “We support it any way we can. If it’s the toss of a coin, we always go with rail. The port has done a wonderful job of re-energizing rail service.”

For Foster, the restored railway is more than an economic boon. On a personal level, it has been a labor of love. He began his railroad career in 1966 in Ohio. When port officials bought the railroad, he was retired and living in Florida.

“I came out of retirement to do this,” Foster said. “Not many people can say they started a railroad from scratch with zero customers.”

When the railway restarted last year, it was hauling 20 loads a month. Now it is running 200.

“It’s OK, but we’re moving slowly,” Foster said. “Some of the sawmills and lumber mills have closed down. We’ll have to figure out a way to replace them. We want to draw new business to the area and keep what we’ve got.”

Rehabilitation work on the bridges along the line will begin in early 2013, Foster said.

Hamner said trains may seem old-fashioned in metropolitan areas where freight is associated with trucks and planes. In rural areas such as Coos County, she said, rail is still vital. At least half of the contracts awarded for the rail project have gone to Oregon companies near the line, Hamner said.

“It’s a huge boost for Oregon and the Northwest,” she said.

The money to complete remaining projects will come from grant sources and community, governmental and business partnerships, according to Hamner. That is one of the most exciting aspects of the whole process, she said.

“We’ve all come together on this,” she said.

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More than $27 million has been awarded for transportation improvement and planning projects in Oregon and Southwest Washington from the U.S. Department of Transportation.

Two freight projects, one community plan and a project to install electric vehicle chargers along Interstate 5 received the TIGER II money, which is part of the federal stimulus act.

The largest award, $13.57 million, went to the Oregon International Port of Coos Bay to rehabilitate tracks and improve the operating condition for the Coos Bay Rail Line. Martin Callery, the port’s chief commercial officer, said deferred maintenance along the line led CorpRail to embaro its use in 2007. The line has been closed ever since. The port has been slowly gathering money for repairs and expects to re-open it as a low-speed rail line in the second quarter of 2011, Callery said. The Tiger II grant money will allow the port to then upgrade the lien to handle higher-speed rail by the end of 2012.

The West Vancouver Freight Access project, a $137 million effort to fix rail congestion at the Port of Vancouver, received a $10 million grant. That money will be used to relocate facilities within the Port’s property to make new entryways into port terminals and create more storage for trains, among other improvements.

The Oregon Department of Transportation will install up to 42 direct-current, fast-charge stations for electric vehicles along Interstate 5 with its $2 million TIGER II grant.

In addition to the TIGER II money for capital improvement projects, $1.5 million in grant money was awarded to a planning project in Washington County. The Aloha-Reedsville Livable Community Plan will investigate the economic and physical decline of the areas between Beaverton and Hillsboro as well as create plans for land use, street improvements and bike and pedestrian projects.

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An international shipping company continues to eye the Port of Coos Bay on the Southern Oregon Coast as the future home of its newest terminal to handle container cargo.

But APM Terminals North America has slowed the process in light of a struggling global economy that has caused shipping companies to record huge losses.

Marine traffic at Coos Bay is down 50 percent this year and is expected to remain at that level in 2010, said Jeffrey Bishop, executive director for the Port of Coos Bay.

“There is no rush to add capacity to the system,” Bishop said.

The general plan, however, hasn’t changed, he said.

Bishop said he is barred from naming the development company that’s under contract with the Port of Coos Bay. But Oregon Sen. Joanne Verger, who represents the coastal area, has confirmed that the port is working with APM, and the shipping company has stated in trade publications that Coos Bay is being considered for a new terminal.

The terminal being proposed by APM would give the Port of Coos Bay an advantage in handling container traffic in Oregon, which is currently dominated by the Port of Portland.

APM is talking about building a terminal capable of annually handling 2 million 20-foot unit equivalent containers, the industry standard. By comparison, Portland managed 245,459 containers in 2008. The Coos Bay terminal also would mean an infusion of construction jobs to build a facility expected to cost between $400 million and $700 million.

Josh Thomas, spokesman for the Port of Portland, said the port generally considers projects like the one proposed for Coos Bay as benefiting the overall region. He noted that the Port of Portland’s marine business isn’t exclusive to containers. The port also handles cargo like auto transport ships, dry and liquid bulk shipments and grain.

“It’s a well-diversified portfolio,” Thomas said.

Wayne Plaster, district manager with Northwest Container Services Inc., remains skeptical that a major terminal as proposed by APM would work in Coos Bay.

“The only reason a major steam ship line would call (on the Port of Coos Bay) is if they had direct rail connection running inland because you don’t have a local consumption base,” he said.

The port in March bought the 111-mile-long rail line that stretches from the coast to the Willamette Valley, but the route needs drastic repairs. The port is currently using $2.5 million in federal stimulus money to repair a tunnel. Bishop said the port hopes to have the rail line operating within the next 15 months, but acknowledged work is already behind schedule.

Bishop said the port’s business is closely tied to Japan’s economy. The container business would allow Coos Bay to diversify its business and give shippers an alternate destination rather than the larger West Coast ports.

“Our focus with both railroad and water side development is to focus on any intermodal development,” Bishop said.

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