U.S. regulator rejects Jordan Cove LNG export terminal and pipeline project

LNG Tanker
Source: DollarPhotoClub

The U.S. Federal Energy Regulatory Commission denied permission to build the Jordan Cove LNG export terminal in Oregon along with a pipeline project to supply gas to the terminal. In the order denying authorization, the FERC said that the two companies behind the project – Calgary-based Veresen and Williams Partners – failed to demonstrate that the pipeline’s benefits would outweigh the “adverse effects on landowners,” and without a pipeline supplying gas, the Jordan Cove export terminal “can provide no benefit to the public to counterbalance” the impacts associated with its construction, the agency said.

Initiated in 2007, the Jordan Cove project was originally thought as an import facility and as such was initially approved by the Federal Energy Regulatory Commission in December 2009. That decision was nullified once it was decided that it would be re-purposed as an export terminal. A separate application for approval to construct an export facility was filed with the FERC and has subsequently been rejected.

The Jordan Cove facility would consist of two full containment storage tanks, each with a capacity of 160,000 cubic metres. It would have a single marine berth for loading liquefied natural gas and a dedicated tractor tug dock. Once operational, the terminal would have four “trains,” or LNG production plants, capable of making 6.8 million metric tons of LNG a year. The facility would be supplied by a 232-mile (373-kilometer), $1.74 billion Pacific Connector gas pipeline owned by Veresen and Williams Partners.

The terminal would provide employment to about 450 people during construction and 60 people once completed.

Veresen said in a statement that it was “extremely surprised and disappointed” by the decision and plans to request a rehearing on it. “We will continue to advance negotiations with customers to address this concern,” Don Althoff, the company’s chief executive officer, said.

“Jordan Cove was one of the few projects off the West Coast we would have expected to move forward,” Het Shah, an analyst at Bloomberg New Energy Finance in New York, told PowerSource. According to the Veresen website, the terminal would “meet the growing global demand for LNG by providing direct access to abundant Canadian and U.S. Rockies natural gas supply sources, primarily through existing pipeline and gas gathering networks,” thereby bringing – in Shah’s words – “much-needed relief”  to these gas markets by creating another outlet for the region’s production.

Consequently, the regulator’s decision is bad news for U.S. shale industry, which is drowning in surplus gas. Some point out, however, that a glut of natural gas has become a global, rather than just U.S., phenomenon, threatening the economics of export facilities in the U.S. According to the research and consulting group Wood Mackenzie, as much as half of the nation’s LNG export capacity is at risk of being shut between 2017 and 2020.

The FERC’s decision is a huge victory for environmental groups, which opposed the construction, including the influential Sierra Club.

“This historic victory is the result of over a decade of hard work by Oregonians and their allies across the environmental movement committed to protecting their communities from this dangerous proposal,” Sierra Club executive director Michael Brune said.

“Allowing dangerous proposals like Jordan Cove to continue will only lead to more drilling and fracking, which in turn will further pollute our air and our water and bring about more climate-fueled weather disasters like the record droughts, wildfires and superstorms we have witnessed in recent years.

“Fossil fuels like gas are not in the public’s interest, and we are thrilled to see FERC make this ruling and take such a strong stance,” he concluded.

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