Too Soon to Celebrate the Demise of Jordan Cove

By Nick Abraham of Portland, Oregon. Nick is the editor of Oil Check Northwest, a local research-focused energy and politics watchdog.

Earlier this month in a decision that caught everyone from activists to the Governor’s office by surprise, the Federal Energy Regulatory Commission (FERC) rejected plans to build a massive liquefied natural gas (LNG) export terminal, known as Jordan Cove, in Coos Bay, Oregon. The project also would build a pipeline cutting across more than half the state.

"Because the record does not support a finding that the public benefits of the Pacific Connector Pipeline outweigh the adverse effects on landowners, we deny Pacific Connector's construct and operate the pipeline," said the FERC order.

FERC’s permit denial meant that project backers Veresen, Inc., a Canadian energy company, and pipeline operator the Williams Partners, would not be able to begin construction of the Jordan Cove Energy Project.

Leading up to the FERC decision, it had not been an easy road for Jordan Cove. The two companies were unable to negotiate deals with 90% of residents along the 232-mile pipeline path and would likely have relied heavily on federal eminent domain law. This practice of seizing private land (and compensating owners accordingly) for a project deemed in the public interest is a controversial legal tool, and one that is especially reviled in rural Oregon.

Over the project’s long permitting process, residents of Coos Bay and the surrounding region also raised grave concerns. The small city would see up to 2 massive ocean-going vessels/week (PDF download) carrying LNG to Asia, raising the risk of spills and increasing traffic for the trade dependent region. Jordan Cove would be Oregon’s single largest source of pollution fostering both local and global concerns. Natural gas pipeline leaks recently have become a terrifying prospect for many after California's Porter Ranch disaster. Outside Los Angeles, a well couldn’t be capped for 4 months and after locals became sick in droves, all 11,000 residents of near by Port Ranch had to be evacuated.

The FERC judgment was heralded as a long-awaited victory by those who’ve been fighting the project for more than a decade. Lost in the headlines however is a window for the project to still be built.

How the project has already come crawling back

Jordan Cove’s LNG would be entirely shipped to Asia, where demand has been notoriously volatile. The FERC decision made it clear that because demand for LNG in places like China, Japan and Korea has been so unstable, the project’s viability was in question. FERC made it clear that demand for LNG wasn’t strong enough, and therefore the project’s benefits did not outweigh impacts to landowners and the environment.

But FERC left Veresen a chance to reapply for permits if the company could prove significant demand for LNG. Unfortunately, for concerned Oregonians that’s exactly what happened this week.

On Tuesday March 22nd, Japan-based Jera Co., Inc., signed an agreement with Veresen to purchase 1.5 million of the facility’s estimated 6 million tons of annual LNG capacity. While details of the proposal are still being finalized, this announcement puts Jordan Cove right back into the mix.

Big hurdles remain – Oregonians still have the same concerns and opposition against the project and pipeline remain fierce. Backers will have to go through what is likely to be a contentious permitting process and FERC still could deny the project based on previously cited concerns. Veresen will likely seek more agreements to solidify its stance but the deal with Jera alone gives this project new life.

Despite the headlines, Jordan Cove is anything but dead.

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