Skeptics think Canadian liquefied natural gas (LNG) exports to Asia face some significant hurdles, and two similar projects in Oregon don't have a completely uncluttered path to Far East markets either, even if they both manage to get FERC and other federal government approvals.
State and local permitting has not been a piece of cake for either the proposed Oregon LNG or Jordan Cove projects, which over the years since they were first proposed as LNG import terminals have faced vocal local and environmental opposition. The prospects for the two U.S. West Coast projects have been viewed as brighter than the crowded field of proposals in British Columbia (see Daily GPI, Sept. 24).
Oregon LNG also continues to contend with stiff political opposition from the Clatsop County commission, which project manager Peter Hansen said claims to have the ultimate authority to prevent the project from moving forward. "We disagree," Hansen said.
Last Wednesday, the Clatsop County Commission voted 5-0 to reject the portion of Oregon LNG's proposed 86-mile, 36-inch diameter pipeline running through the county. Hansen dismissed the rejection, saying the project ultimately will move ahead based on federal preemption.
"We're going forward with a very different approach," Hansen told NGIMonday. "The pipeline is FERC [Federal Energy Regulatory Commission] jurisdictional and the courts have made it abundantly clear that local jurisdictions will not be allowed to delay the federal jurisdictional line."
Hansen cited a recent case in which the courts upheld the rights of Dominion Resources to move ahead with a FERC-approved pipeline in Maryland over local objections. The Oregon LNG project will seek U.S. Commerce Department authorization to move ahead despite the county's rejection, he said. He does not expect move to add more time to the project's current schedule.
Since their project's inception nearly a decade ago, the Oregon sponsors have had local and state political battles to contend with. More recently, Sen. Ron Wyden (D-OR), chair of the Senate Energy and Natural Resources Committee, has been a critic of LNG exports. While Gov. John Kitzhaber has been supportive of natural gas, he has remained neutral about the export plans.
Last spring, Jordan Cove project manager Bob Braddock said he had met with Wyden and Kitzhaber and was encouraged by the positions they had taken. Wyden is aware of the "positive local support" the Jordan Cove project is receiving, and Braddock said the senator sees "exporting some amount of LNG as a good thing."
Recent reports out of Canada have indicated that the economics for proposed LNG export projects to Asia, tied to global oil prices, are not that favorable anymore (see Daily GPI, Oct. 14). For Braddock, the latest reports from north of the border echo what he has been saying for some time -- "while they appear to be ahead of us in terms of permitting, there still exists a great deal of uncertainty surrounding their ability to achieve timely construction of the pipelines needed to supply gas to these terminals."
Hansen pointed to labor shortages in the oil/gas patches of western Canada as another potential stumbling block for the Canadian projects, noting a recent report that workers are being brought in from Ireland to supplement local labor.
Braddock said Jordan Cove, backed by Canadian-based Veresen Inc. (formerly Fort Chicago Energy Partners LP), has secured all necessary local land-use approvals, except for one, which he thinks will be completed by the end of November.
"While opponents continue to raise objections to virtually every local land-use application made by the project, all applications have been approved and withstood every appeal," Braddock said. "We feel confident that we conform to all currently existing local land-use requirements and see no basis by which local opposition would be able to overturn these approvals."
While noting that he doesn't view the two Oregon projects as being competitors because there is plenty of gas and LNG market to support both projects, Hansen said he thinks his project has cost and permitting advantages over Jordan Cove. He considers Oregon LNG's hurdles as being "process-oriented problems" that eventually will be resolved, while Jordan Cove faces more substantive environmental problems that are not as easily overcome.