The state of Oregon last Tuesday asked FERC to reconsider its conditioned approval of the Jordan Cove liquefied natural gas (LNG) terminal and connecting transmission pipeline in the south-central part of the state at Coos Bay. As it has in challenging an earlier approved LNG terminal proposal at Bradwood Landing along the Columbia River, Oregon officials alleged that the federal regulators acted prematurely in approving Jordan Cove and the proposed Pacific Connector pipeline in December.
The state expected the feds to wait until after the project sponsors had completed their Endangered Species Act consultations, according to Jordan Cove Project Manager Bob Braddock, speaking last Wednesday with NGI. "It is pretty arcane, but we are actually going to be starting consultations on those issues in about another month," said Braddock, who noted that in order to preserve its right to appeal, the state has to ask for reconsideration by the Federal Energy Regulatory Commission (FERC).
Always expected by the LNG project sponsors, Oregon's contention is that FERC should not act before a state weighs in with its approvals under the federal Clean Air and Water acts, although an appellate court is examining that argument in the NorthernStar Natural Gas Corp. Bradwood LNG case (see NGI, Jan. 4). Competitors describe the Bradwood project as "stuck," but a NorthernStar spokesperson continued to reject that characterization last Wednesday, contending that all three Oregon LNG projects face potential legal challenges in the Ninth Circuit. The spokesperson also cited the outcome of a similar case involving a BP unit's proposed LNG facility on the East Coast and the state of Delaware.
In Jordan Cove's case, a landowner, environmental/fisheries advocates and others joined the state by filing their own petitions at FERC. News reports noted that appealing to the federal energy regulators has been a common path for the state and others as the various LNG project sponsors undergo FERC scrutiny. FERC denied a similar position filed in the Bradwood Landing case, and the federal regulators have since filed in the U.S. Court of Appeals for the Ninth Circuit: Ninth Circuit federal court, and on Tuesday officials indicated that Oregon plans a similar filing to the appellate court if FERC denies the reconsideration filing.
The challenge comes at a time when even some in the energy industry in the Pacific Northwest are questioning the need for LNG in the region, given the growing supplies of gas in Western Canada and the U.S. Rockies from the natural gas shale boom. At an energy conference earlier this month in Seattle a variety of speakers expressed no enthusiasm about the prospects for LNG. A Bradwood spokesperson discounted the contention that the Northwest no longer needs LNG imports.
"We can land gas at our facility at less than $4/MMBtu, and that makes us competitive with conventional gas coming down from Canada," said the Portland-based NorthernStar/Bradwood spokesperson. "Even looking at the availability of gas, there are always going to be supplies available; the question has always been, 'At what price?' LNG is currently competitive even in today's market, and that's why there were some 90 cargoes imported into the United States in 2009 when the average Henry Hub price was in the $4-4.20 price range."
The LNG advocates contend that they are just proposing merchant terminal projects and they won't proceed without long-term contracts with shippers that will have their LNG supplies gasified and put in the regional interstate pipeline system and that gas from shale will be higher priced than LNG imports because of the extensive costs for extraction. "A lot of shale gas will be priced at $7 or $8/MMBtu," the Bradwood spokesperson said. "We still think that LNG will be the lower-priced option for the Pacific Northwest."
Braddock said Jordan Cove is trying to be "proactive" in dealing with Oregon officials, noting that the request to FERC for reconsideration is "not a big deal," but whether they go to the next step of appealing through the courts is unknown since the state has already established that precedent with the Bradwood Landing case. "I think the question is whether they want to spend another quarter-of-a-million-dollars pursuing an appeal like that; I guess it will depend on whether the state feels it can establish the precedent with one filing or they have to do it for all the projects? I have no idea."
Intelligence Press Inc. All rights reserved. The preceding news report
may not be republished or redistributed, in whole or in part, in any
form, without prior written consent of Intelligence Press, Inc.