The Jordan Cove liquefied natural gas (LNG) export project and connecting pipeline in Oregon is close to both getting a final FERC approval and to announcing an initial agreement with an anchor shipper of western Canadian and U.S. Rockies gas supplies to Asia, the CEO for the project said.
"We continue to make good progress on signing a key term sheet offtake agreement with an anchor tenant ," said Veresen Inc. CEO Don Althoff during a Dec. 7 conference call. "We expect to announce something in a few months."
While acknowledging that completion agreements with LNG sellers are taking longer than he would like, Althoff said Jordan Cove is a large project with "a lot of moving parts," and he is pleased with the progress so far. The Calgary, Alberta-based midstream developer/operator expects a certificate from the Federal Energy Regulatory Commission (FERC) this month, he said.
FERC has only one more meeting this year -- Thursday -- and the Jordan Cove project is not on the agenda, a FERC spokesperson said Monday. The commission could act on the certificate outside of its regular meetings, or at its Jan. 21 meeting, she said.
Althoff said Veresen has budgeted $98 million for Jordan Cove work in 2016, but that could increase if the company makes a final financing decision on the project some time after the mid-year. By the end of the first quarter, the company should have a clearer idea of its costs for the project, he said.
The LNG export project, which would be located at Coos Bay, OR, bids to be the first U.S. greenfield LNG project to win FERC approval and the first on the U.S. West Coast. It would need to have close to 100% of its total 1 Bcf/d capacity under contract to move ahead with financing and construction, Althoff said.
"Ideally, we would like to have 100% of the plant committed before we went to the final financing decision," Althoff said.
"We're looking for something up to half of the volume from an anchor tenant, and there are a number of other potential offtakers who could take the other 50% of the plant. We think that will happen in relatively short order [after an anchor tenant is nailed down]."
Althoff said the offtake agreements for Jordan Cove that Veresen is seeking are all "term sheets," which he said are about 15 or 20 pages, locking in basic parts of the agreement, but they don't include a lot of details on terms and conditions that would have to be negotiated in final contracts.
"Because we will have more than one buyer at the site, all of the contracts need to be nailed down, and they need to have specificity around the engineering/procurement/construction [EPC] contract.” Althoff said the company will get the term sheets first and then work on the final terms/conditions as the EPC contract is finalized.
Noting that the term sheets will not be binding, but are more detailed than memoranda of understanding, Althoff said the company’s "expectation is that we will be able to say publicly who the buyers are."