In a first step to gaining broader approvals, the Jordan Cove liquefied natural gas (LNG) project in Oregon on Wednesday gained an initial approval from the U.S. Department of Energy (DOE) to export LNG. The backers of the project at Coos Bay called it a “procedural” step needed to seek broader DOE and FERC approvals.

Jordan Cove had applied to DOE last September for authorization to export up to 438 Bcfe of LNG annually. In October the state of Oregon filed a protest to the DOE application, but the federal agency dismissed the state’s arguments.

Wednesday’s approval only clears the way for exports to free-trade agreement nations, which do not include the major Pacific Rim gas market countries such as China and Japan. DOE’s action, however, allows Jordan Cove now to pursue export approvals from the Federal Energy Regulatory Commission (FERC) to make the project an import-export facility (see Daily GPI, Nov. 14).

Backers of the project along Oregon’s south-central coast said last month they would seek to make their proposed LNG facility and its 1.2 Bcf/d connecting transmission pipeline a dual export-import project, meaning the pipeline flow would be reversible. An initial proposed import terminal and the Pacific Connector pipeline were both approved conditionally by FERC in 2009.

Earlier this month, the Oregon attorney general asked FERC to revoke its earlier approvals, alleging that an import-export facility would drive up energy costs for consumers (see Daily GPI, Dec. 8).

Although initially limited, the DOE export license was needed before FERC would consider an export request from Jordan Cove, said Project Manager Bob Braddock. Backers plan to make the filing early next year, Braddock told NGI.

“The sequence is that you have to have an export license before FERC will take you seriously,” Braddock said. “We applied for a [DOE] export license just like every other terminal has done. It is more of a procedural step than substantive.”

FERC has the responsibility to permit the construction and operation of LNG facilities. DOE has the responsibility to establish whether exporting LNG is in the national interest. “They don’t make that determination with the free trade agreement nations because they have already integrated our markets with those nations,” Braddock said.

Eventually, Jordan Cove will have to request another approval from DOE to ship gas to non-free trade nations. “We will do that probably sometime early next year,” Braddock said. “That’s a more laborious process in which we submit a lot of analysis on why our exporting gas would be a net benefit to the United States.”

In the eventual DOE filing, Jordan Cove will have to address the issue of future exports’ potential impact on domestic gas prices, along with a host of other issues, Braddock said.

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