Heading into what they hope is the home stretch for their permitting process, backers of the Jordan Cove liquefied natural gas (LNG) project at Coos Bay, OR, announced Monday they have reached an agreement with the Oregon Department of Energy on the would-be terminal’s future commitments to state, county and other governmental agencies. The announcement comes as the Jordan Cove backers await a final FERC environmental assessment May 1.

Jordan Cove is a limited partnership between an affiliate of Alberta-based Fort Chicago Energy Partners LP and Energy Projects Development LLC, proposing to build the terminal at Coos Bay’s international port. It has received a favorable draft environmental impact statement (DEIS) from the Federal Energy Regulatory Commission (FERC) last fall and has withstood appeals to its local county conditional land-use permit (see Daily GPI, Sept. 2, 2008).

Project Manager Bob Braddock called the memorandum of understanding (MOU) with the state energy unit a “landmark agreement” that has been four years in the making and is what he called “the first of its kind for an LNG facility” in the state, which currently has three active LNG terminal proposals, the other two being targeted for along the Columbia River near its entrance into the Pacific Ocean.

Under the MOU, Jordan Cove’s backers outline the resources and financial support the project will provide to public agencies related to safety and security services for the LNG terminal, which will operate as a tolling facility for shipments from various global sources.

Braddock told NGI Monday that the agreement also specifies the terminal project’s commitments to ensure that its operations comply with state standards to mitigate greenhouse gas emissions and eventually the plans to retire the facility after its useful life. “While the Oregon Energy Facilities Siting Council imposes such standards on energy facilities, these same standards cannot be unilaterally imposed on federally regulated facilities, such as LNG terminals,” he said. “Jordan Cove has voluntarily agreed to comply.”

Current plans for Jordan Cove call for a final FERC ruling in July this year, and a delayed timetable calling for construction to begin late next year with potential customers for the gas telling the would-be terminal operator it won’t be needed in the Northwest until 2014. Braddock indicated talks are ongoing for offtakers of the LNG, but there are no active discussions now for third parties to sign long-term capacity agreements to run their shipments through the proposed terminal.

On the local level, Braddock said Jordan Cove’s permitting is basically complete, except for what he called “technical issues” that were remanded to Coos County from the state Land Use Board of Appeals. None of the issues are “lightning rods,” he said. The county conditional-use permit was challenged, and the Oregon Supreme Court rejected the appeals a few weeks ago.

“We’re really looking for a notice to proceed in the third quarter next year, and that is really driven by [end-use] customers,” Braddock said. “We’re negotiating right now with about five parties, and they all have a common time horizon that is centered on 2014.

“Jordan Cove always has been committed to implementing the [Oregon] agency-recommended safety and security measures, and we’re extremely pleased to sign this [Department of Energy] agreement spelling out the details.”

Last year Braddock and his partners had called on FERC to issue its DEIS by the end of July 2008 so construction of the proposed terminal could be completed in time to attract long-term Pacific Rim LNG supplies (see Daily GPI, June 4, 2008). The company said it wanted to begin construction no later than the mid-part of this year, with completion by either late 2012 or early 2013 “to secure reliable long-term supplies of LNG.” That obviously now has been pushed back.

The project calls for the construction of a marine berth; two storage tankers with a combined 6.4 Bcf of capacity; regasification and sendout capacity of 1 Bcf/d; an electric power plant; and a natural gas liquids extraction facility to recover propane and butane.

Separately a consortium has proposed the Pacific Connector pipeline, a 230-mile, 36-inch diameter pipeline to transport up to 1 Bcf/d from the proposed Jordan Cove terminal to markets in the region. The pipeline would interconnect with Williams’ Northwest Pipeline near Myrtle Creek, OR; Avista Corp.’s distribution system near Shady Cove, OR; and Pacific Gas and Electric Co.’s transmission system, Tuscarora Gas Transmission’s system and Gas Transmission Northwest’s system, all located near Malin, OR.

Pacific Connector last year announced it has entered into agreements with seven customers for the full capacity of the pipeline project. The proposed pipeline is a limited partnership of Williams Pacific Connector Gas Pipeline LLC, PG&E Strategic Capital Inc. and an affiliate of Fort Chicago Energy Partners, Fort Chicago LNG II US LP.

FERC’s final environmental assessment will include both the LNG facility and the pipeline.

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