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Pembina 'sadly' can no longer predict when Jordan Cove LNG will be built in US

Highlights

Warning comes with investment writedown

Regulatory, commercial hurdles plague project

Houston — Canada's Pembina can no longer predict when it will be able to build its proposed Jordan Cove LNG export terminal in Oregon. The company is evaluating a path forward.

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Pembina issued the warning Feb. 25 as it took a big writedown on its investment in the project and several others in its latest financial results.

The project would benefit from being the first liquefaction facility on the US West Coast, an advantage because of its its shorter shipping distance to East Asia compared with existing terminals on the Gulf Coast. Pembina, and the original developer of the project that it later acquired, Veresen, encountered significant challenges over the last eight years in securing necessary regulatory permits and commercial agreements to be able to sanction construction.

In a statement accompanying its fourth-quarter 2020 financial results, Pembina said it recognized an impairment in the value of certain assets, including Jordan Cove, Ruby Pipeline and a petrochemical facility investment.

"We believe the time for these projects may come," the company said. "However, we can sadly no longer predict with certainty when that time will be and hence were compelled to reflect their impairments in our 2020 financial statements through a non-cash charge."

With regard to Jordan Cove, Pembina cited the impact of current regulatory and political uncertainty. More generally, it cited market impacts from the coronavirus pandemic, including significant price volatility.

"The company continues to believe in the strategic rationale of Jordan Cove," Pembina said.

The first US Federal Energy Regulatory Commission permit certificate application for Jordan Cove and the affiliated Pacific Connector feedgas pipeline was filed in 2013, then rejected in 2016. The second application was filed in 2017. In March 2020, FERC voted 2-1 to conditionally approve the certificate for the export terminal and feedgas pipeline. The project still faces state regulatory hurdles in Oregon and fierce opposition from environmental groups and some US lawmakers.

While Pembina has deferred or suspended some other projects, it has so far stuck with Jordan Cove, at least nominally, as the ongoing pre-construction development costs are seen as minimal. To date, the company has not announced any firm long-term offtake contracts tied to the proposed liquefaction terminal.