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FERC again denies Jordan Cove LNG developers

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FERC again denies Jordan Cove LNG developers

FERC again rejected the developers of the Jordan Cove LNG project and associated gas pipeline, finding that their denial in March was properly ruled and there was no reason yet to reopen the proceedings on the Veresen Inc.-backed venture.

In a Dec. 9 order, FERC said the developers failed to demonstrate "extraordinary circumstances" that would call for the commission's rejection to be reconsidered. FERC on March 11 denied the Oregon LNG export terminal and Pacific Connector Gas Pipeline project, pointing to a lack of commercial support and impacts to the surrounding area that outweighed the the project's benefits.

The developers in April filed a request for rehearing, saying they had entered into several agreements that demonstrated commercial support for the project.

"Commission staff sent Pacific Connector four data requests, over 3.5 years, asking for evidence of market demand for the Pacific Connector Pipeline," the order said. "We do not find that the global nature of the LNG markets, or any circumstances unique to this proceeding, precluded the applicants from relying on the guidance of our well-stated Commission policy to file evidence in a timely manner sufficient to meet their burden to demonstrate the extent to which their proposed project would benefit the public."

FERC also noted that, as in the March ruling, Jordan Cove and Pacific Connector can submit a new application attempting to show market need.

Taylor Johnson, Jordan Cove's vice president for commercial and legal, criticized the ruling and said the project is reviewing its options. "At this point, two options -- appeal to the federal courts or refile -- are on the table," he said in an email. "We'll be talking with our lawyers over the next couple days to better understand the reasoning (or rather, lack thereof) in FERC's order and to plot a way forward."

The rehearing rejection came after Veresen allocated $30 million in its 2017 capital budget to develop the planned 0.9-Bcf/d LNG export project for the port of Coos Bay, Ore., and the Pacific Connector pipeline.

Shortly after FERC's initial rejection, Veresen announced that it had reached agreements for at least half of Jordan Cove's design capacity and binding agreements on Pacific Connector that represented more than 75% of its capacity.

Jordan Cove CEO Elizabeth Spomer said Oct. 3 that the project did not get a full chance to prove its economic viability before FERC denied its application because confidentiality restrictions kept Veresen from disclosing pending contracts with JERA Co. Inc. and ITOCHU Corp.

Veresen on March 22 signed a preliminary agreement to provide long-term natural gas liquefaction capacity to JERA at Jordan Cove, a deal covering the purchase of 1.5 million tonnes per annum of liquefaction capacity for an initial term of 20 years, subject to the negotiation of a tolling contract. On April 8, Veresen nailed down a similar off-take agreement with ITOCHU for at least 1.5 mtpa for 20 years.

Spomer in a Nov. 2 letter had pressured FERC to promptly grant the request for rehearing, saying that while the agreements with JERA and ITOCHU were still in place, federal approval was necessary before progress could be made. Colorado localities in the Piceance Basin also sent letters asking FERC to rehear the project, which they said had ample commercial support and would increase natural gas production activity in the Mancos Shale. (CP13-483, CP13-492)