Wyoming, Colorado want Jordan Cove rehearing

OREANDA-NEWS. April 13, 2016. Wyoming and Colorado officials have urged the US Federal Energy Regulatory Commission (FERC) to rescind its denial of construction authorization for the Jordan Cove LNG export project.

The planned Jordan Cove LNG terminal in Coos Bay, Oregon, would receive gas from western Canada and the US Rocky Mountain region via the proposed 232-mile (373km) Pacific Connector pipeline, which would link with existing pipelines.

Domestic markets for Rocky Mountain gas have decreased in the last several years with construction of significant pipeline capacity to move Marcellus shale to midwestern and Gulf coast markets.

Colorado governor John Hickenlooper wrote FERC yesterday that Jordan Cove "is the only LNG facility on the west coast that would directly link Colorado to new energy markets via the Ruby Pipeline."

The 680-mile Ruby Pipeline, which extends from Wyoming to Oregon, is equally owned by Veresen and Kinder Morgan.

"The Jordan Cove LNG project represents an important new source of demand for Ruby's shippers and for the natural gas producers in the Rockies," Kinder Morgan said a letter yesterday asking FERC to reverse its decision.

In the 12 months ended June 2011, eastbound gas flow from the Rocky Mountain region, mostly Wyoming, averaged 4.6 Bcf/d (130mn m?/d), but dropped by 26pc, to an average of 3.4 Bcf/d, in the 12 months ended February, the state of Wyoming and the Wyoming Pipeline Authority said in a joint filing yesterday to FERC.

"In sum, the economic well-being of the state of Wyoming and its roughly 580,000 residents is significantly affected by the volume of natural gas produced in the state, the price of natural gas produced and the availability of access to markets in which to compete for the sale of natural gas produced in Wyoming," the letter said.

In addition to reduced sendout, low energy prices since mid-2014 have significantly cut the state's royalties from the production of natural gas and related hydrocarbons from \\$107mn in 2008 to \\$42mn in 2015.

FERC on 14 March denied a construction permit for Pacific Connector because the project had not signed any transportation capacity deals, nor held any open seasons to solicit bids. Because Jordan Cove would have no way to get gas without Pacific Connector, FERC also denied a construction permit for the terminal.

Pacific Connector had not shown any potential public benefits to warrant having eminent domain powers that would come from construction authorization, FERC said.

Wyoming and the state's pipeline regulator said FERC failed to consider potential benefits, including "enhancing the ability of natural gas produced in Wyoming to compete in international markets."

Calgary-based infrastructure Veresen, which owns 100pc of Jordan Cove LNG 50pc of Pacific Connector, yesterday petitioned FERC for a rehearing. Since the FERC rejection, Veresen has signed preliminary 20-year deals for at last 3mn t/yr of liquefaction capacity, equivalent to 400mn cf/d of gas, and agreements totaling 790mn cf/d of the planned capacity of 1 Bcf/d on Pacific Connector.