Officials: Proposed LNG terminal offers market connection for West Slope gas

Phil Castle
Phil Castle

Phil Castle, The Business Times

Plans to construct a liquefied natural gas export facility on the Oregon coast and a pipeline to supply it proceed despite regulatory hurdles, according to officials from two companies involved in the projects.

The end result of building the Jordan Cove terminal and Pacific Connector Gas Pipeline could be long-term Asian markets for natural gas produced in Western Colorado, the officials said.

“We can get Piceance Basin gas from Mesa County to Japan,” said Bob Braddock, senior project advisor for the Jordan Cove Energy Project.

Braddock and Blaine Pritchett, project director of the Pacific Connector for Williams, offered an update at an energy briefing hosted by the Grand Junction Area Chamber of Commerce.

In March, the Federal Energy Regulatory Commission (FERC) denied applications to construct the terminal and pipeline, citing a lack of demand.

A rehearing since has been requested, and Braddock said preliminary agreements have been reached to purchase about half the capacity of the Jordan Cove facility.

FERC has until May 8 to grant or deny a rehearing or extend the deadline, Braddock said. Even if FERC were to deny a rehearing, applications for the project would be refiled, he said.

The Jordan Cove terminal has been in the works for about 10 years as a project of Veresen, a Canadian energy infrastructure company, Braddock said. Veresen also owns a half interest in the 680-mile Ruby Pipeline system that extends from Wyoming to Oregon.

Jordan Cove initially was proposed as an import terminal at a time when it was believed natural gas supplies would dwindle in the United States. But the project was changed to an export terminal in the aftermath of booming production that’s made the U.S. one of the leading natural gas and oil producers in the world, he said.

The location for Jordan Cove near Coos Bay constitutes the “primo spot for an LNG terminal on the West Coast,” Braddock said. The site works even better for an export terminal than an import terminal, he added.

As proposed, the facility would include equipment to purify, cool and liquefy natural gas. Two tanks each measuring 300 feet in diameter and 200 feet tall would store a total of 11.3 million cubic feet of LNG. A natural-gas fired power plant would generate electricity for operations.

Construction on Jordan Cove is expected to take about four years, and the project will cost about $6 billion, Braddock said.

Even as FERC considers whether or not to reconsider the application, work is under way on two separate efforts to develop bids for Jordan Cove. Those packages are scheduled for completion in November, after which a contractor will be selected if there’s regulatory approval for the project, Braddock said.

Meanwhile, work also proceeds on the Pacific Connector Gas Pipeline, Pritchett said.

The 232-mile, 36-inch pipeline would extend from a hub at Malin, Ore., to the Jordan Cove facility near Coos Bay. The pipeline would basically start where the Ruby Pipeline ends, connecting natural gas supplies from the Western U.S. to the LNG terminal. The Pacific Connector would transport up to 1 billion cubic feet of natural gas a day, Pritchett said.

The pipeline is expected to take more than two years to construct and cost nearly $1.75 billion, he said.

Demand for the Pacific Connector can be demonstrated with service agreements for 77 percent of the capacity of the pipeline, Pritchett said. The Jordan Cove facility accounts for 50 percent of capacity. “We feel that is a compelling case.”

Pritchett said he expects the FERC to approve the filing for a rehearing.

Braddock said there’s a market for LNG in such Asian countries as China, Japan and Korea.

Japan ranks among the top countries in the world for energy consumption and imports about 95 percent of its needs, he said.

Japan also ranks as the top LNG importer in the world, Braddock said. The country currently imports a total of 60 percent of its LNG from the Middle East, Australia and Russia, but would like to add North America to the mix, he added.

It would take only about nine days to ship LNG from Oregon to Japan, he said. That would offer an advantage over other sources of LNG, even from the Gulf Coast of the United States.

What the Jordan Cove and Pacific Connector projects could mean for Western Colorado, Braddock said, is a long-term and stable market for natural gas produced in the region. “These guys aren’t coming and going. They’re locking down an agreement for 20 years.”

For more information about the proposed Jordan Cove liquefied natural gas terminal, log on to
www.jordancovelng.com. For more information about the Pacific Connector Gas Pipeline, visit
www.pacificconnectorgp.com.