FERC rejects rehearing for Jordan Cove LNG, pipeline denials

The members of the Federal Energy Regulatory Commission on Dec. 9 rejected rehearing requests of their March 11 decision to not approve applications for the Jordan Cove liquefied natural gas (LNG) export project and a gas pipeline to serve that project.

On March 11, the commission issued an order denying:

  • Pacific Connector Gas Pipeline LP’s application to construct and operate a 234-mile-long interstate natural gas pipeline (Pacific Connector Pipeline); and
  • Jordan Cove Energy Project LP’s application to site, construct, and operate an LNG export terminal and associated facilities.

Jordan Cove, Pacific Connector, the State of Wyoming, and the Wyoming Pipeline Authority filed timely requests for rehearing.  “For the reasons discussed below, we deny the requests for rehearing,” said the Dec. 9 FERC ruling.

In 2013, Jordan Cove had filed an application to site, construct, and operate an LNG export terminal on the North Spit of Coos Bay in Oregon. Also in 2013, Pacific Connector applied for a certificate of public convenience and necessity to construct and operate the Pacific Connector Pipeline, an approximately 232-mile-long, 36-inch-diameter interstate natural gas pipeline originating at the Oregon/California border near Malin, in Klamath County, Oregon, and terminating at the Jordan Cove LNG Terminal. The Pacific Connector Pipeline was designed to provide up to 1,060,000 dekatherms per day (Dth/day) of natural gas transportation service from interconnects with the interstate pipelines of Ruby Pipeline LLC and Gas Transmission Northwest LLC near Malin, Oregon, to the Jordan Cove LNG Terminal.

In addition to delivering natural gas to the LNG Terminal, the Pacific Connector Pipeline would have the capability to provide deliveries to markets along its route and along Northwest Pipeline GP’s Grants Pass Lateral.

In denying the Pacific Connector application back on March 11, FERC said the company failed to demonstrate a need for the project sufficient to outweigh the potential harm to the economic interests of landowners whose property rights might be taken by exercise of the right of eminent domain. Pacific Connector had neither entered into any precedent agreements for its project, nor had it conducted an open season, which might have resulted in “expressions of interest” the company could have claimed as indicators of demand. 

The March 11 order held that the Jordan Cove LNG Terminal is an integral part of a single project to export domestic gas supplies and the terminal project is not feasible without a pipeline to transport gas to the terminal.

On April 8, Jordan Cove and Pacific Connector jointly filed a request for rehearing. They said that since the March 11 order, Jordan Cove had entered into two agreements with foreign companies for the export of LNG. JERA Co. Inc. and ITOCHU Corp. have each agreed to purchase 1.5 million tons per year of LNG capacity for an initial term of 20 years.  Additionally, Pacific Connector entered into precedent agreements with:

  • Macquarie Energy LLC for 215,000 Dth/day of firm transportation service from Malin, Oregon, to the Jordan Cove LNG Terminal;
  • Avista Corp. for 10,000 Dth/day of firm transportation service from Malin, Oregon, to the Clarks Branch Meter Station; and
  • Jordan Cove for 592,354 Dth/day of firm transportation service from Malin, Oregon, to the Jordan Cove LNG Terminal.

The companies stated that the capacity of the Pacific Connector Pipeline was now 77% subscribed under precedent agreements for long-term firm service. They contended that the agreements executed since the March 11 order are sufficient evidence of market need to support approval of the projects.

Said the Dec. 9 FERC order: “We will not reopen the administrative record. The Applicants have failed to demonstrate the existence of “extraordinary circumstances” that overcome the need for finality. Prior to issuing the March 11 Order, Commission staff sent four data requests to Pacific Connector asking it to show that the public benefits of its proposed Pacific Connector Pipeline outweighed the project’s adverse impacts, consistent with the Commission’s Certificate Policy Statement. In response to each data request, Pacific Connector stated that its negotiations were “active and ongoing” and provided no certainty as to when it would receive agreements for the pipeline’s capacity. We afforded Pacific Connector ample time – over 3.5 years – to demonstrate evidence of market demand or to contract for and submit the precedent agreements with its firm shippers prior to issuing the March 11 Order.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.