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County, port have high hopes for major project with Beijing ties

by: COURTESY OF COLUMBIA COUNTY ECONOMIC TEAM - Representatives of Columbia County and the Port of St. Helens among a delegation from the Pacific Northwest that visited China in May: fourth from left, Chuck Daughtry of the Columbia County Economic Team; to Daughtry's right, Clatskanie City Manager Greg Hinkelman; to Hinkelman's right, Paula Miranda from the Port of St. Helens.A development company controlled by China’s government wants to build a factory at Port Westward, and it has initiated a series of high-level contacts between local officials and Chinese representatives to highlight its seriousness.

Three officials representing the industrial park north of Clatskanie were part of a delegation that visited China in May to meet with investors and officials from the Chinese companies of which NW Innovation Works LLC is a subsidiary.

“We want to understand a little bit better what they are doing,” said Paula Miranda, deputy executive director of the Port of St. Helens, who went on the China trip.

NW Innovation Works is a Vancouver, Washington-based limited liability company owned by the Shanghai Bi Ke Clean Energy Technology Co. Ltd. — a joint venture between the government-run Chinese Academy of Sciences, which is the majority owner, and London-based energy company BP. It was founded earlier this year in partnership with the Chinese port city of Dalian.

The gist of the project is this: NW Innovation is planning to build a facility at Port Westward that will use natural gas from the Mist pipeline to produce methanol, a commodity that will then be exported to Dalian, where it will be converted into olefins, a compound used in plastics.

The visit to China was the most major step yet in a series of exchanges. A Chinese investment group planned a visit to the Pacific Northwest this month, and officials from Columbia County and the Port of St. Helens may make another trip to China in the fall.

“I think the biggest thing was that we expressed our interest with the Chinese in terms of this project. We’ve got lots of support from the public and the members of CCET,” said Chuck Daughtry, executive director of the Columbia County Economic Team, of the China trip. “It’s real. The Chinese government is investing lots of money in facilities over there to receive the methanol once it’s shipped from the West Coast.”

Company officials are enthusiastic about the project. NW Innovation Works President Murray V. Godley III called it “the perfect fit for this community” in an earlier interview with the Spotlight, noting that once the factory is up and running, it will not require any materials to be freighted to Port Westward by rail and will have a limited road impact as well.

Chinese interests laid out in report

by: COURTESY OF COLUMBIA COUNTY ECONOMIC TEAM - Chuck Daughtry (left), executive director of the Columbia County Economic Team, speaks with Sun Yuhan (right), director of the Shanghai Advanced Research Institute. The institute works with the parent company of the developer that has proposed a methanol export facility at Port Westward, the industrial park north of Clatskanie.

The report on the China trip produced by CCET also highlights the supposed environmental benefits of the methanol venture.

“Coal and oil are currently used to produce olefins,” a section of the June 9 report from Daughtry to the CCET board of directors reads in part. “US and Canada natural gas can displace coal and oil as feed stock in the production of olefins. ... Natural Gas conversion to methanol is cheaper than converting oil and produces less pollutants than converting coal.”

The report suggests carbon dioxide emissions from olefin production would decrease by 20 to 30 percent if natural gas is used instead of coal and oil.

The report concludes, “We need to get ahead on communicating the positive environmental benefits of this project. This project will have significant impacts on the reduction of carbon emissions in China.”

Daughtry said China is working hard to curb its well-publicized air pollution woes.

“The air quality in China is extremely poor, especially in the urban areas,” said Daughtry. “And this project will have a significant reduction in the CO2 levels in China.”

The CCET report also notes that “the Chinese are specifically requesting that local agencies assist with the permitting process and the political process” and suggests that “it is absolutely critical for Columbia County and the Port to demonstrate a continued commitment to this process.”

Asked whether the port has any concerns about working with the Chinese government on the methanol project, Miranda said, “I can’t say there is, from my experience.”

“We don’t have any bad experience on our end here,” Miranda continued. “So far, I don’t feel that. Of course, whenever you’re working with another foreign government, especially one that had issues in the past, you keep your eyes open, right?”

Asked the same question, Daughtry responded, “I think that’s a plus. The government is backing the project, so they’re putting resources to it. The Chinese are looking for American investment.”

Potentially lucrative for county

County officials see the project as a prospective cash cow.

Columbia County has been grappling with declining revenues. It turned to a property tax levy just to keep its jail open this year. Voters approved the levy in May, but only by a narrow margin and after rejecting a levy for a longer duration last November. The levy is set to expire in three years, putting more pressure on the county to find a way to grow its budget quickly.

“In the near future, we’re looking at the possibility of developments in this county that would bring in as much as a 50 percent increase in our revenues for county services. That growth means industrial development in the Port Westward area,” said County Commissioner Earl Fisher on June 25, mentioning the methanol project as the largest single component. “Money for public health. Money for mental health. Money to operate our jail without a tax levy. It would mean that we would have money available to keep the courthouse open five days a week.”

The total value of taxable property in Columbia County last year was assessed at about $4.41 billion. Godley has said the methanol plant could total $1.8 billion on its own after two construction phases.

“There is a ton of taxes that will come out of this,” Daughtry said. “It’s just amazing, when you start looking at it, the amount of revenue that will be coming back to the county.”

There is an urban renewal district at Port Westward, which Columbia County uses to pay back development loans. The district captures tax revenues above the rate as it existed in 2000, when the district was established.

Daughtry and County Assessor Sue Martin said large new developments could quickly satisfy the urban renewal district, which is not intended to be permanent, and resolve the county’s outstanding loans.

“What this will do is this will pay off the urban renewal district very quickly,” said Daughtry.

“If they pay it off, they can dissolve it early,” Martin explained.

Port Westward one of three sites

The Washington ports of Kalama and Tacoma are also planned to host methanol plants as part of the same Chinese development push in the Pacific Northwest. Both sites were also represented in the American delegation that visited China in May.

“I thought it was important ... that we also be represented,” said Miranda. “We don’t want to feel like we’re falling short with the other projects.”

Officially, the methanol project is planned for all three ports. But Miranda said the Port of St. Helens sought some reassurance that it would not be passed over in favor of the other sites.

“We’ve been told all along that it was not a competition — they truly have the need for as much methanol they can get from each one of these projects,” Miranda said. “And of course, the only way to see that is to dig in a little bit more in trying to understand, from the parties out there, what they’re really trying to do, if it’s a competition or not.”

Miranda said the trip left her with the impression that China wants the methanol from all three proposed plants and the sites are not in any competition.

But, she added, “Of course, there is always one leg up for the project that gets in first, because if something happens, there’s always a chance that the first project will go, and something may happen with the others. ... We still don’t know if that’s the case.”

“Even though they’re saying that the sites are not competing against one another, the first one permitted gets built,” Daughtry said.

According to the CCET report, the Port Westward site offers advantages such as proximity to a natural gas pipeline, which connects the industrial park to the Northwest Natural Gas Co. storage facility at Mist, and access to “incentives,” such as enterprise zone benefits from the county or a strategic investment plan from the state, either of which could offer temporary property tax exemptions for the methanol project.

Miranda said Port Westward may also benefit from being subject to Oregon’s regulatory process, rather than the process in Washington, where Kalama and Tacoma are located.

Editor's note: A previous version of this story misstated the position of Chuck Daughtry in the first photograph. He is fourth from left in the pictured group.

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