US regulators have rejected the application to build the Jordan Cove LNG liquefaction project and the associated natural gas supply pipeline after determining that the impacts of the project outweighed the benefits to the public.
The US Federal Energy Regulatory Commission (Ferc) rejected requests to approve both the Jordan Cove terminal on the Oregon coast and the Pacific Connector pipeline that would bring feed gas to the facility.
The move illustrates that the federal government is taking notice of the growing backlash by landowners against companies using government-backed eminent domain to push through large energy infrastructure projects.
Jordan Cove had already received approval from the US Department of Energy to export up gas both to countries that have free trade agreements with the US and those that do not but it needed construction approval from Ferc.
As planned, Jordan Cove would include four liquefaction trains with total capacity of 6 million tonnes of LNG per annum that would be fed via the 232-mile Pacific Connector line - owned by Veresen and midstream giant Williams Partners – which would have capacity of 1.06 Bcfd.
The project is being proposed by Calgary-based energy conglomerate Veresen, which is plans to source gas from the Canadian and US natural gas systems and liquefy it for export, targeting buyers in Asia.
In their decision, Ferc commissioners indicated that Veresen had not provided figures showing the amount of capacity that it had sold on the pipeline or even held a formal open season.
While such figures are not required for approval, they would help establish that there is a market demand for the project, Ferc said.
“Here, Pacific Connector has presented little or no evidence of need for the Pacific Connector Pipeline. Pacific Connector has neither entered into any precedent agreements for its project, nor conducted an open season, which might (or might not) have resulted in “expressions of interest” the company could have claimed as indicia of demand,” the commissioners wrote. “Moreover, commissioners were concerned that there would be significant impacts to landowners along the pipeline route if it endorsed the project.”
Currently, Veresen has reached agreements to purchase right-of-way access for the pipeline with less than 5% of landholders along the pipeline route and a Ferc approval would have given Veresen the power to use eminent domain to force the landowners to grant such easements.
“We find the generalized allegations of need proffered by Pacific Connector do not outweigh the potential for adverse impact on landowners and communities,” the commissioners wrote.
They also rejected the application to build the Jordan Cove liquefaction facility itself, saying that without the pipeline connection to bring in feed gas, there was no public benefit to the export project.
“We find that without a pipeline connecting it to a source of gas to be liquefied and exported, the proposed Jordan Cove LNG Terminal can provide no benefit to the public to counterbalance any of the impacts which would be associated with its construction,” the commissioners wrote. “The Commission has not previously authorized LNG export terminal facilities without a known transportation source of natural gas.”