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Pembina working on path forward for Jordan Cove after state permit snag


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Pembina working on path forward for Jordan Cove after state permit snag

Canada's Pembina Pipeline Corp. considers a water permit tied to its proposed Jordan Cove LNG export terminal that Oregon regulators rejected in May to be a critical piece of its efforts to make the project commercially viable, the company said Aug. 1.

As the North American gas and liquids infrastructure company released second-quarter financial results, it said it is working on a path forward after the state Department of Environmental Quality encouraged it to reapply for the permit.

Prior to the state regulator's decision, Pembina delayed by up to a year the expected startup of the U.S. West Coast terminal project and affiliated Pacific Connector feedgas pipeline, as it limited spending on development of the projects. It has struggled to secure firm long-term off-take agreements with buyers of the LNG it plans to produce, and it has faced multiple hurdles over state and federal permits during the six years the project has been on the table.

"Each of the permits are a critical component of the regulatory process and enable the commercial viability and critical investment to move forward," Pembina said.

During an Aug. 1 conference call to discuss the latest financial results, CEO Michael Dilger said commercial discussions with prospective customers were continuing.

Pembina inherited the project when it acquired Veresen Inc. in 2017. Since then, it has been supportive of Jordan Cove based on the idea that the location of the facility would benefit from a shorter shipping route to Asia compared with terminals on the U.S. Gulf Coast. The company is currently pursuing a Federal Energy Regulatory Commission permit certificate for the second time, after the first application was rejected. It expects a final FERC decision on its current application by January 2020.

The Oregon agency said it denied the application for the water permit because of concerns that include the expected effects of the construction and operation of the proposed pipeline and associated road and work areas on water temperature and sediment in streams and wetlands. The agency said it also was concerned about the risk of release of drilling materials from the construction of a proposed crossing of the Coos Bay estuary.

The Section 401 water quality certification is required for the U.S. Army Corps of Engineers to issue permits for the project. The Oregon agency said that if Pembina addressed its concerns in a new application, it would work to keep the timing of its review in line with the overall federal permit schedule for the project.

Pembina had targeted securing sufficient binding off-take agreements by the end of March to be able to advance the Jordan Cove project to a final investment decision, but that time period came and went without an announcement.

Pembina said in May, just before the Oregon decision, that its latest plan was to work to conclude binding offtake agreements by early 2020. That extension and the cut to development funding announced at the time meant that it did not expect its first LNG until as late as 2025, compared with 2024 previously. Its statement Thursday did not address any further changes to timing.

Harry Weber is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.