While FERC action on a rehearing request is still pending (see Daily GPI, April 11), backers of the Jordan Cove liquefied natural gas (LNG) project along the south-central coast of Oregon said Thursday that they expect to have two engineering, procurement, construction (EPC) contracts for the project and additional tolling agreements in place later this year.
The rehearing request at the Federal Energy Regulatory Commission is complex, Veresen Inc. CEO Don Althoff said during a conference call with analysts Thursday. "FERC is wrestling with a policy issue, so we don't have a lot of precedent and it is hard to speculate about exactly when [a decision might be coming]," Althoff said.
In the meantime, Veresen is continuing to be proactive, said Althoff, noting its officials continue with supply contract talks, pipeline rights-of-way discussions and marshalling more community support.
"We've been able to get more options on rights-of-way, which was one of FERC's issues and concerns, and we have tried to make sure federal regulators understand that there is a lot of community support for the project," he said.
Veresen expects to have two "lump sum, turnkey offers" before the end of this year, Althoff said. "One of the EPC firms is starting to ramp down the engineering and get more into the procurement side of the process," Althoff said. "Having two very clear definitive EPC packages by the end of the year will be an important milestone for the project."
Althoff said Veresen is actively engaged in negotiations for the rest of the tolling capacity at Jordan Cove, following reaching preliminary agreements this spring (see Daily GPI, April 8).
"We have half the volumes in terms sheets and are working closely with JERA Co. Inc. and ITOCHU Corp. to convert those into [contracts], so that is working well," Althoff said. "And we are in negotiations with additional buyers for the rest of the capacity in the plant."
Althoff said he is seeing a lot of due diligence and site visits by the parties, so he is "optimistic." These prospective customers are "spending money to really dig into the project, and that gives me confidence we are going to get more contracts in place and more volumes in line," he said.
Earlier this year, Veresen struck a preliminary agreement for more capacity at the proposed Jordan Cove LNG terminal at Coos Bay in Oregon when ITOCHU tentatively agreed to purchase 1.5 million tonnes per annum (mtpa) of liquefaction capacity for a 20-year term, adding to the JERA deal. At the time, Veresen said 3 mtpa of liquefaction capacity of the project was spoken for with another 3 mtpa left.
For 2Q2016, Veresen reported adjusted net income of $13 million (4 cents/share), compared to earning of $11 million (4 cents/share) for the same period last year.
Stay up to date on 2Q2016 earnings and projections for the remainder of the year withNGI's Earnings Call and Coverage sheet.