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Jordan Cove LNG cost estimate rises to $10bn

04 May 2017 22:58 (+01:00 GMT)
Jordan Cove LNG cost estimate rises to $10bn

Houston, 4 May (Argus) — The long-delayed Jordan Cove LNG export project in the US northwest has increased its estimated construction cost to $10bn from $7.5bn.

The higher cost is primarily related to the planned Pacific 233-mile (375km) Pacific Connector pipeline that would bring feed gas from western Canada and the US Rocky Mountain region to the planned terminal in Coos Bay, Oregon, Veresen chief executive Don Althoff said today in an earnings call. Calgary-based infrastructure Veresen owns the project.

Veresen's potential returns would be about the same despite the cost increase, as the planned liquefaction capacity has been increased by 30pc to 7.8mn t/yr, equivalent to about 1 Bcf/d (28mn m³/d) of gas, Althoff said.

Veresen declined to provide a cost breakdown for the terminal and pipeline.

Canadian midstream Pembina on 1 May agreed to buy Veresen in a deal worth C$9.7bn ($7.1bn), including assumption of debt. The combined company, worth $24bn, would be one of the largest infrastructure companies in North America. The larger financial resources would make it easier to develop large projects such as Jordan Cove, Althoff said.

Jordan Cove in February started a new regulatory review, after last year becoming the first LNG export project rejected by the US Federal Energy Regulatory Commission (FERC).

FERC on 10 February approved the project's entry into its pre-filing process, designed to identify major permitting issues and stakeholders before a formal application is filed for construction approval.

Veresen hopes to start construction in the first half of 2019 and begin exporting in the first half of 2024. It plans to submit a formal FERC application in August and get construction authorization in November 2018.

FERC in March 2016 denied authorization for the Pacific Connector pipeline because it had not signed any binding customer contracts to warrant using eminent domain powers that would come with FERC approval. The agency then rejected the proposed terminal because it would have no way to get gas without Pacific Connector.

On 20 April National Economic Council director Gary Cohn said the "first thing" the Trump administration would do is approve a permit for an LNG export terminal in the northwest, apparently referring to Jordan Cove.