FERC OKs Oregon LNG port; state to appeal

Allen Baker

For Petroleum News

The Federal Energy Regulatory Commission has approved construction of a liquefied natural gas terminal at Coos Bay on the Oregon Coast.

Appeals are planned by both the state administration and environmental groups, but the project may face more serious hurdles in the economic arena.

FERC voted 3-1 on Dec. 16 to approve the Jordan Cove project and an associated 230-mile gas pipeline across the rugged Coast Range to link the port to the existing gas supply network.

Oregon Gov. Ted Kulongoski and Attorney General John Kroger said they would formally ask the commission to reconsider, and appeal to the 9th U.S. Circuit Court of Appeals if necessary, as they have already done with another LNG terminal approved by FERC at Bradwood Landing on the lower Columbia River.

But both Oregon projects could be substantially delayed or canceled entirely due to changes in economic realities since they were proposed.

Sempra Energy has already built its LNG import terminal in Mexico, far closer to the big Southern California market. The Ensenada facility is operating only sporadically and has lots of spare capacity.

Meanwhile the natural gas supply balance has changed dramatically with development of shale gas. British Columbia’s Horn River likely will have ample capacity to provide gas to the West Coast market at a far lower price than LNG, and with a pipeline network already in place. The U.S. economic downturn also has blunted demand, at least for the immediate future.

The Coos Bay terminal, which could send out a billion cubic feet of gas a day, is owned by a unit of First Chicago Energy Partners L.P. The pipeline project is a partnership involving subsidiaries of First Chicago, Williams Cos. Inc. and PG&E Corp.

The total cost of the project is estimated at $2.5 billion. l

—The Associated Press contributed to this story