Regulators re-open door for Jordan Cove, Pacific Connector projects
Local governments and natural gas producers on the Western Slope and other supporters of two natural gas projects in Oregon received some good news last week when federal regulators announced they would reopen the door to both proposals.
The Federal Energy Regulatory Commission issued an order granting an extension for the Jordan Cove liquefied natural gas (LNG) terminal project in Coos Bay, Oregon, and the application for the 232-mile-long Pacific Connector pipeline that would feed natural gas to the terminal.
That order came less than two months after FERC denied both applications, largely based on the premise that they failed to prove enough market demand to offset the impacts of the projects.
Since then, project supporters have remained cautiously optimistic that FERC would reconsider the applications for the terminal and the pipeline. Monday’s order did not set a date for a possible rehearing, leaving the matter open-ended for the time being. Nonetheless, the decision was a “very positive” development, said Michael Hinrichs, spokesman for Jordan Cove.
Combined, the two projects could open the door to foreign markets for producers here in the Piceance Basin and elsewhere in the Rocky Mountains.
The proposed Pacific Connector would connect with existing pipelines, and transport that gas to the planned Jordan Cove facility where it would be exported to markets in the Pacific and potentially elsewhere.
That potential long-term economic shot in the arm for local natural gas producers has led to widespread support from the industry and local governments, including the city of Rifle. Days before FERC’s recent order, City Council approved a letter requesting the commission to “act quickly” in granting a rehearing and approving the project.
“The project would provide a significant economic benefit to multiple western states and their local communities where energy development has historically been a major economic driver,” the letter states. “ … The city of Rifle requests the Department of Energy and FERC afford Colorado this economic opportunity by reconsidering its decision regarding the Jordan Cove LNG terminal and ensuring that companies in the Rocky Mountain region are supplied with the demand needed to justify future natural gas production.”
The support from Rifle is one more example of a larger effort that David Ludlam, executive director of the West Slope Colorado Oil and Gas Association, called the most bipartisan issue he has ever worked on.
He pointed to the public support from Gov. John Hickenlooper, a Democrat, and U.S. Sens. Michael Bennet and Cory Gardner, a Democrat and Republican. With other elected officials on opposite sides of partisan lines voicing support, Ludlam said this project’s ability to transcend standard political divides should demonstrate a widespread belief in the public value of the project.
However, support for the project is not unanimous.
Private landowners have protested the project, citing potential adverse impacts to their properties, should construction of the Pacific Connector move forward. Those include a decrease in property value and interference with land uses, such as farming.
The Sierra Club has argued that the Jordan Cove terminal fails to serve public interest. In a formal protest to FERC, the organization rebuffed the potential economic benefits asserted by supporters, and contended that the terminal would do more harm economically than good. Sierra Club also raised concerns on the environmental impacts arising from increased natural gas production.
In considering the objections from landowners and claims made by the project leaders, FERC ruled the alleged benefits of the Pacific Connector failed to outweigh the adverse impact to landowners and communities, largely due to a lack of customers for the natural gas.
In the weeks following the decision, Veresen, the corporation developing Jordan Cove, announced preliminary agreements with two large buyers in Japan.
Speaking at the Garfield County Oil and Gas Symposium in late April, representatives from both Jordan Cove and Pacific Connector updated attendees on the projects. The underlying message was that while the FERC ruling in March was a setback, work was pressing on.
That work since the March ruling appears to be paying off, Hinrichs said. Currently, 50 percent of the total Jordan Cove LNG capacity is spoken for through preliminary agreements, and 77 percent of the Pacific Connector’s capacity has been claimed.
“Personally I believe that we have satisfied, or are on our way to completely satisfying (FERC’s) request,” Hinrichs said.
Give the commitments from customers and the broad support from elected officials and producers, Ludlam said it would have been astonishing for FERC to not reconsider the projects.
Since a re-hearing date has not been set, Hinrichs said Jordan Cove will continue submitting information demonstrating the public benefit of the project.
“We’re confident we’ll have additional customer agreements in the near future,” he said.
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