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FERC delays Jordan Cove LNG rehearing decision

09 May 2016 19:19 (+01:00 GMT)
FERC delays Jordan Cove LNG rehearing decision

Includes company argument that fewer private landowners involved.

Houston, 9 May (Argus) — The US Federal Energy Regulatory Commission (FERC) today indefinitely delayed a decision on whether to grant the Jordan Cove LNG export project in Oregon a rehearing over a denial of a construction permit.

FERC said it needs more time to consider issue raised by Jordan Cove and its supporters, including local politicians, business groups and the states of Colorado and Wyoming, which could provide some feed gas.

Under statutory law, FERC had until today to rule on Jordan Cove's 11 April request for a rehearing, but it has the authority to grant itself more time.

FERC on 11 March rejected the $7.5bn project, the first time it had denied a construction permit for an LNG export project in the contiguous US.

Calgary-based infrastructure company Veresen owns 100pc of the planned export terminal in Coos Bay, Oregon, and 50pc of the proposed 232-mile (373km) Pacific Connector pipeline that would bring feed gas from western Canada and the US Rocky Mountains. Midstream company Williams owns the other half of the pipeline project.

FERC said since Pacific Connector had not signed any agreements with customers, the pipeline project had not shown an adequate public benefit to warrant having eminent domain powers that would come with FERC approval. The regulator said the project likely would need to use such powers, as about 157 miles of the pipeline route would traverse private land owned by about 630 landowners, 54 of whom intervened in the FERC process to oppose the project. But Jordan Cove said in a supplemental filing that the actual number of affected landowners is 278, claiming that FERC used an incorrect calcuation from affected landowners opposed to the project. The landowners responded that the number is significantly more than 278, but the actual total does not change the legal issues.

FERC also rejected the proposed export terminal because it could not get gas without the pipeline.

Veresen has said if it has to restart the FERC regulatory process from beginning, it could lose a limited market opportunity to come on line in 2021-22.

To try to address FERC's concerns, Jordan Cove signed a precedent agreement on 8 April for about 572mn cf/d (16mn m³/d) of firm transportation capacity on Pacific Connector to serve export customers.

Pacific Connector signed two other contracts after FERC's decision, with the three deals totaling 790mn cf/d of the planned capacity of 1 Bcf/d.

Also after FERC's decision, Veresen reached two non-binding long-term deals to sell a total of about half of the planned initial liquefaction capacity to Japanese customers Jera and Itochu. Jera is a joint venture of utilities Tokyo Electric Power and Chubu Electric Power.

Veresen has said it needs to sell virtually all the planned initial capacity of 6mn t/yr to finance the project.