FERC Snubs Rehearing for Oregon LNG Terminal

Researched by Industrial Info Resources (Sugar Land, Texas)--Late last week, the U.S. Federal Energy Regulatory Commission (FERC) denied Veresen Incorporated's (TSX:VSN) (Calgary, Alberta) request for a rehearing for permission to construct the Jordan Cove liquefied natural gas (LNG) export project in Coos Bay, Oregon.

The request to construct the plant and the accompanying 232-mile Pacific Connector natural gas pipeline, which was to be built by Williams Partners LP (NYSE:WPZ) (Tulsa, Oklahoma), was originally denied permission by FERC in March this year on the grounds that Williams and Veresen failed to demonstrate that the pipeline's benefits would outweigh "adverse effects on landowners," and without the pipeline, the 6 million-ton-per-year Jordan Cove export terminal could provide no benefit to the public. Veresen first applied with FERC to construct the Jordan Cove terminal in 2013. After FERC's decision in March, Veresen filed a request for a rehearing on the decision with FERC in early April.

In its latest decision, FERC said backers of the project had failed to demonstrate a need for the facility, as well as any reason to reopen the case for construction of the facility.

In addition to the pipeline, the $7 billion-plus project was to have included a 420-megawatt power plant to help power the LNG facility.

As part of its request for a rehearing, Veresen submitted preliminary agreements with Asian utilities to prove that there was demand for the LNG produced at the facility. In a Veresen press release regarding FERC's decision, Chief Executive Officer Don Althoff said, "We are very disappointed by FERC's decision, especially in light of the significant progress that has been made in demonstrating market support for the project and the strong showing of public support for the project." Althoff said that "Veresen remains committed to this important energy infrastructure project."

Industrial Info is tracking billions of dollars of proposed LNG liquefaction terminals in the U.S. as domestic production of shale gas makes the natural gas cheap and plentiful. The projects require FERC authorization to be sited, built and operated, and permission from the U.S. Department of Energy to export LNG to other countries. Many facilities, such as the Jordan Cove project, were originally proposed as LNG import facilities before the abundance of natural gas came to the U.S. market.

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