FERC's continued inaction on rehearing requests is hurting progress on other permitting and commercial deals related to the proposed Jordan Cove liquefied natural gas (LNG) export project along the south-central coast of Oregon, project sponsors at Calgary-based Veresen Inc. said Wednesday during a 3Q2016 earnings conference call.
Earlier this year, Veresen sought a rehearing (see Daily GPI, April 11) following a rejection by the Federal Energy Commission due to perceived lack of commercial interest in the project (see Daily GPI, March 14) that the sponsors now contend they have demonstrated.
The lack of a "substantive ruling" by FERC has created "a lack of immediacy, delaying further commercial progress and is beginning to slow the process for securing approvals from other agencies," said Veresen CEO Don Althoff, who said Veresen's underlying midstream business remains strong amid increased quarterly profits.
"The pace of advancing contracting [with LNG buyers/shippers] has slowed as a resolution by FERC has lingered, and continued delay by FERC could further slow progress and has the potential to affect the project's ability to advance other regulatory approvals," Althoff told analysts on the earnings call. "We will keep advancing Jordan Cove because it is a great development project, and we continue to get support from our world class buyers that underpin our belief that the project will ultimately proceed."
In response to analysts' questions, Betsy Spomer, CEO of Jordan Cove LNG, said she believes FERC will act before the end of this year as the current commissioners try to resolve pending decisions ahead of the new presidential administration's appointees to the commission.
"With the election cycle coming to a close, we plan to redouble our efforts to emphasize to FERC as well as our supporters at the federal level that we need resolution of this decision," said Althoff, adding that failure to do so "could further impact the timeline on the project."
Spomer said that the pending FERC permit has several other key permits that are directly related, including permits from the U.S. Army Corps of Engineers, which in turn is tied closely to the state water quality permit. "So as federal progress is slowed at FERC we have also had to suspend progress with other FERC-related permits, so work with the state is suspended pending FERC's action," she said. "There is no doubt the delay in the FERC action is slowing some of our other key components."
She said what she is hearing from FERC is that the remaining commissioners "would like to clear the decks of their pending decisions by December when new commissioners are appointed in the lame duck congressional session."
In response to separate questions, Spomer said Jordan Cove has "well over 70%" of the right-of-way for the 232-mile connecting Pacific Connector transmission pipeline committed, and she is not concerned about the new resource management plan from the U.S. Bureau of Land Management (BLM) harming the pipeline routing.
Noting that she had recently met with BLM regional officials in Portland, OR, Spomer said Veresen is working with BLM staff now and she "remains confident the new requirements will be something we can cover off with an additional environmental assessment, but we really need to do the work and get BLM's sign-off."
For 3Q2016, Veresen reported adjusted net income of $21 million (7 cents/share), compared with profits of $12 million (4 cents) for the same quarter last year.