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Developers of a natural gas pipeline intended to bring new supplies to the Portland metro area have pulled their application from federal regulators, citing the bankruptcy of a terminal on the Columbia River, low demand for gas, and development of a new route across the Cascade Range.

Palomar Gas Transmissions LLC notified the Federal Energy Regulatory Commission on Wednesday it was withdrawing the Palomar Pipeline project.

The 220-mile, $750 million project was a joint venture of NW Natural and TransCanada U.S. Pipelines.

It was originally planned to carry gas from the now-defunct Bradwood Landing liquid natural gas terminal in Clatsop County and the Northwest Pipeline on the east side of the Cascades to the Portland area.

TransCanada spokesman David Dodson said from Houston that the eastern half of the project would be revived when market conditions improved. It could take a new route through the Confederated Tribes of the Warm Springs Reservation, reducing the mileage across Mount Hood National Forest and crossings of federally protected rivers.

Dodson said the company had no firm commercial commitments to buy the gas but believed demand would grow in the future. The question was how much and when.

Ken Zimmerman, a gas industry analyst at the Oregon Public Utility Commission, said the Palomar project was the latest in a string of proposed pipelines in Oregon to collapse due to the recession reducing demand.

"I'm not saying Palomar is totally dead," he said. "But it's going to take a little more growth. Between energy conservation and the economy being down, it's really driving down demand."

Environmental groups that had opposed the pipeline because it would require excavations across farmlands, forests and rivers claimed victory.

The Palomar pipeline would have caused a 47-mile-long clearcut through Mount Hood National Forest, and required Mount Hood National Forest to amend its laws to weaken protections for old growth forests and wild and scenic rivers,' said Olivia Schmidt of BARK, a conservation group.

"We interpret this as the result of Oregonians being willing to stand up for their values, clean water, healthy forests, and intact fisheries and to protect our rural communities from needless projects — especially projects designed to perpetuate our dependence on dirty fossil fuels," Schmidt said.

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