The Port of Tacoma approved a lease for plans by Puget Sound Energy to build a $275 million liquefied natural gas (LNG) facility.

The proposed facility will allow PSE to continue providing dependable, affordable natural gas service to 770,000 residential and commercial natural gas customers in Western Washington during periods of peak demand. It will also provide an opportunity to serve local transportation companies looking to shift from traditional fuel sources to cleaner LNG.

"We are excited to make this environmental and economic investment for Tacoma," said Kimberly Harris, PSE's President and CEO. "It provides significant clean air benefits, reinforces our service to existing customers, generates economic opportunities in the region, allows us to pursue new markets, and keeps our customers' rates down."

PSE is also expected to execute an agreement to supply TOTE with LNG to fuel its two Orca-class cargo ships that travel weekly between Tacoma and Anchorage, Alaska. In 2012, TOTE announced plans to upgrade those two vessels to run on LNG instead of diesel fuel. This innovative technology and cleaner fuel source will help TOTE exceed the EPA's new air-emission standards, which require vessels operating within a 200-mile zone along U.S. and Canadian coastal waters to reduce sulfur emissions from their engines to improve air quality.

Because of its environmental benefits, LNG is becoming an increasingly popular choice for the transportation sector, including both maritime shippers and long-haul trucking fleets. The PSE facility, when completed, will provide enough LNG production and storage capacity to replace approximately 47 million gallons of diesel fuel a year.

LNG is the liquid form of natural gas, a fuel used in millions of homes, businesses and vehicles every day. It's produced by cooling the natural gas to approximately minus-260 degrees Fahrenheit, which reduces it to less than 1/600th the volume of the original gas, making it easier to store. LNG is neither flammable nor explosive in its liquefied state.

PSE is committed to working closely with the community, local government and our permitting agencies to reduce construction impacts and ensure the facility meets or exceeds all safety and environmental requirements. Construction on the new facility is anticipated to begin with site preparation in 2015 and be completed by the end of 2018.