The Daily 750

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LNG: How To Come Unstuck from the Tar Baby

Friday, December 23, 2005

Exit strategies are hard to come by these days. Here's a unique Christmas gift from the editor of the Daily Astorian.

Calpine gives the Port an exit strategy

Bankruptcy filing exposes the Port of Astoria’s lack of due diligence
The Daily Astorian editorial
Thursday, December 22, 2005

Calpine Corp.’s bankruptcy filing presents the Port of Astoria and the city of Warrenton with an opportunity to become unstuck from a tar baby.

The port’s lease with Calpine for a liquefied natural gas terminal on the Skipanon River contains a sub-sublease provision. It would allow Calpine to assign its lease to another party, but only with the Port of Astoria’s assent.

The Port of Astoria Commission and its executive director erred in three ways in November 2004 when they shopped the Skipanon property to Calpine. This deal diverted the port from its core mission of developing a group of maritime and fish-related activities on its piers.

Secondly, the port’s deal for an LNG terminal amounted to a unilateral decision to transform life at the mouth of the Columbia River, without a public hearing.

Thirdly, as we now may observe, port managers did not look far enough into Calpine’s financial data to see the risk it represented.

Proponents of the Calpine deal have pitched its assets as jobs creation and a huge addition to the county tax base. There is truth to what they represent. At the same time, however, that bargain is untenable to a large number of people who live in this region. It amounts to a fool’s bargain, because the transformation would diminish the environmental and aesthetic values that brought those people here in the first place and continue to attract tourists and residents.

Calpine’s financial fall gives the Port of Astoria a golden opportunity to shed a fractious piece of baggage. The port’s executive director and commission should recognize their good fortune in Calpine’s bankruptcy and move away from this morass.