Environmental opposition and a glut of liquified natural gas (LNG) are among the challenges facing a proposed Oregon natural gas pipeline and export terminal project that is seeking federal regulatory approval for the third time in a decade.
The latest activist pushback occurred on Thursday, Nov. 21, when protesters occupied Gov. Kate Brown’s office, demanding that she announce her opposition to the controversial project.
Brown has yet to declare a position for or against the Jordan Cove proposal, a 230-mile natural gas pipeline and export terminal that would bring natural gas from the Rockies and Canada to Coos Bay, where it would be liquefied and loaded onto ships bound for Asia.
Described by many locals as a “zombie project” for resisting multiple efforts to kill it off, Jordan Cove dates back to 2007, when its developers sought federal approval to build an LNG import terminal in Coos Bay, with a pipeline to transport the imported gas to domestic gas markets.
After the U.S. fracking boom neutered the import terminal business case, the developers reapplied for approval to build an export terminal serving energy-hungry buyers across the Pacific. The Federal Energy Regulatory Commission (FERC) rejected that proposal, and in 2017 the new owners, Canadian energy company Pembina Pipeline Corp. (PPL.TO), returned, once again seeking authorization.
Pembina’s persistence can be explained in large part by the project’s geographical advantages compared to the cluster of LNG terminals on the U.S Gulf Coast.
“It’s the famous refrain in real estate: ‘location, location, location,’” Madeline Jowdy, senior director of global gas and LNG at S&P Global Platts, told FreightWaves.
Although trying to build a fossil fuel plant in “the most environmentally conscious state in the country” might be considered foolhardy, Jordan Cove is only eight or nine days away from two of the biggest LNG importers in the world: China and Japan, Jowdy noted.
The short travel time contrasts with an estimated 30-day voyage from the U.S. Gulf, home to six LNG terminals, with several more coming online in the coming year.
Time is money and never more so than in the LNG transport trade, explained Jowdy. Since liquid gas evaporates, there is a loss of product in transit, she said, “so the longer you go, the more cargo you burn,” she said. “The closer you are to the LNG market, the better.”
The $10 billion project will be an economic boon for the southern part of Oregon, supporters say, generating about $110 million in annual tax revenue for state and local governments.
Opponents cite Jordan Cove’s deleterious climate impacts that would lead to longer wildfire seasons, more frequent droughts and faster ocean acidification. If built, Jordan Cove would become one of the largest sources of greenhouse gas emissions in Oregon.
Some of these impacts were highlighted last week, when FERC staff issued their final environmental analysis of the project, concluding it would result in “temporary, long-term and permanent impacts on the environment.”
Agency staff said construction and operation of the project would result in some adverse environmental impacts, but most of these would be reduced to less-than-significant levels with mitigation measures.
Some impacts would be significant, however, staff concluded.
As Oregonians debate economic and environmental impacts, market analysts warn that global conditions are unfavorable for the plant’s construction.
The LNG market has grown between 8% and 10% annually since 2017, “and we have more than enough LNG to meet our demand outlook as it stands now,” Jowdy said.
“In the short term and in the long term we are incredibly oversupplied,” she emphasized.
According to Jowdy, Jordan Cove faces three additional hurdles: It has yet to receive FERC approval or secure contracted buyers and, unlike Gulf Coast terminals, the infrastructure is not in place to pipe product to the site. “It is close to Asia, but you have to get gas to the plant,” she said.
Oregon vs. Trump administration
A battle over federal and state jurisdiction adds another political dimension.
Seeking to ease regulations for plants like Jordan Cove, the Trump administration earlier this year signed executive orders designed to limit states’ certification authorities under the Clean Water Act.
Earlier this year, the Oregon Department of Environmental Quality denied Jordan Cove’s water quality certification.
Responding to activists who occupied her offices Nov. 21, Gov. Brown’s office issued the following statement: The governor “expects state agencies to follow all laws and regulations to the letter when considering how any proposed project affects Oregon’s clean air and water. … The EPA has recently attempted to remove all authority from the state in the permitting of these kinds of projects. The governor has opposed those efforts and communicated with the EPA earlier this month regarding their rule change.”