Phil Castle, The Business Times
A proposed liquefied natural gas export terminal and pipeline project that would connect Western Colorado supplies with Asian markets enters a crucial phase with local, state and federal permitting.
“This is the big year,” said Michael Hinrichs, stakeholder communications and coordinator with Pembina Pipeline. The Canada-based company backs the Jordan Cove and Pacific Connector Pipeline project in Oregon.
Applications have been filed for a total of more than 40 major permits, Hinrichs said during an update on the project hosted by the Grand Junction Area Chamber of Commerce.
That includes an application with the Federal Energy Regulatory Commission. The commission denied an initial application to construct the terminal and pipeline in citing what it deemed a lack of demand, but agreed to consider a second application. Hinrichs said a decision is expected in January.
The Jordan Cove liquefied natural gas terminal has been proposed for a location near Coos Bay, a former timber hub on the Oregon Coast. The Pacific Connector Pipeline would connect the terminal to a hub 230 miles away in Malin, Oregon.
The Malin hub, in turn, connects to a system of pipelines coming down from Canada and the Ruby Pipeline system in the Western United States, including the Piceance Basin in Western Colorado. Pembina holds a 50 percent ownership stake in the Ruby Pipeline.
A West Coast liquefied natural gas terminal offers competitive advantages over terminals elsewhere in reducing the distance and time it takes to ship natural gas to Asia, Hinrichs said. A round trip between Coos Bay and Tokyo, for example, takes only 27 days. “That kind of competitive advantage over the long-term is tremendous.”
A West Coast terminal also would be well positioned to take advantage of the difference in price between natural gas in the United States and Asia, he said. While the average annual price of gas has been hovering around $3 per million British thermal units in the United States, the price has been around $9 in Asia.
While natural gas prices have moved lower in Asia right now, that’s not expected to remain the case, Hinrichs said. “That’s not true five years from now.”
Japan ranks among the top LNG importers in the world and would like to add North America to a mix of sources that also includes Russia and the Middle East. While price remains an important factor in natural gas markets, so does economic and political stability, he said.
If the projects are approved, Jordan Cove could be operational and exporting gas in 2024, Hinrichs said.
For Western Colorado, the Jordan Cove project offers an opportunity to connect natural gas supplies in the Piceance Basin to Asian markets, Hinrichs said.
“If you all want to get gas to market, this is the easiest way to do it, in my opinion.”
What’s more, 20-year contracts would lock in sales and prices and in turn decrease volatility while increasing sustainability and investment in Western Colorado energy development, he said.
Hinrichs said efforts are underway to secure binding agreements to buy natural gas from the Jordan Cove terminal and connecting pipelines and prove market demand.
Meanwhile, the public comment and review process continues for local, state and federal permits.
By the time the process is complete, the Jordan Cove and Pacific Connector will have been the most publicly vetted projects in the United States, Hinrichs said.
The continued support of business and government leaders in Western Colorado helps, Hinrichs said, asking those at the chamber meeting to write comments. “We need to demonstrate there’s public support out there.”
Asked how the appointment of David Bernhardt as the new interior secretary affects Jordan Cove, Hinrichs said it helps to have government leaders who are familiar with the project.
Hinrichs said he hopes, though, the permits will be evaluated on the merits of the project and politics can be kept out of the process.