Veresen Shows Optimism for Jordan Cove LNG Project by Selecting EPC Contractor

Researched by Industrial Info Resources (Sugar Land, Texas)--Jordan Cove LNG, a subsidiary of Veresen Incorporated (TSX:VSN) (Calgary, Alberta), has selected KBJ as the engineering, procurement and construction (EPC) contractor for the Jordan Cove liquefied natural gas (LNG) project in Coos Bay, Oregon. KBJ is a joint venture of Kiewit Energy Group Incorporated (Omaha, Nebraska), Black & Veatch Construction Incorporated (Overland Park, Kansas) and JGC Corporation (Yokohama, Japan). The move demonstrates Veresen's optimism in the project moving forward, despite setbacks late last year.

The Jordan Cove project will have a designed liquefaction capacity of 6 million tons per year and, as the only LNG facility on the Pacific Coast of the U.S., would have strong export potential to LNG buyers in Asia, including South Korea and Japan. However, in December last year, the U.S. Federal Energy Regulatory Commission (FERC) denied Veresen's request for a rehearing to construct the facility, which FERC had originally denied permission in March 2016. For more information, see December 13, 2017, article - FERC Snubs Rehearing for Oregon LNG Terminal.

However, in June this year, FERC, perhaps buoyed by the Trump administration's apparent willingness for the project to go through, issued a notice of intent to prepare an environmental impact statement for the $6 billion plant and the accompanying 233-mile Pacific Connector pipeline, which will transport natural gas to the facility. The plant is tentatively planned to start construction in 2019 and be completed in 2023. For more information, see Industrial Info's project reports on the LNG facility and the accompanying pipeline. Public comments on the project last through today (July 10).

Should the project proceed as planned, it will use Black & Veatch's PRICO LNG process technology. According to Black & Veatch's website, the company has developed more than 30 operating LNG facilities throughout the world. JGC will help perform engineering and procurement, while Kiewit will provide construction services. In a press release, Don Althoff, chief executive officer of Veresen, said, "The selection of the EPC contractor is a major milestone in the development of Jordan Cove and is the culmination of two years of extensive engineering work."

Should the project go through, the project will be the only West Coast LNG production in the U.S. The nearest competition would come from planned facilities in British Columbia in Canada. In April, Woodfibre LNG Limited (Squamish, British Columbia) announced that Canada's National Energy Board had granted a 40-year export license for the company's planned LNG production and export facility in Squamish, British Columbia. For more information, see April 11, 2017, article - Woodfibre Granted 40-Year Export License for British Columbia LNG Export Facility.

However, the Squamish facility, which is planned to begin construction next summer, will have a production capacity much less than the Jordan Cove project, of 2.1 million tons per year. For more information, see Industrial Info's project report. Other projects, such as LNG Canada's (Kitimat, British Columbia) proposed plant in Kitimat, British Columbia, have delayed their final investment decisions as the spot price for LNG in Asian markets has plummeted in recent years due to an overabundance of the product.

Industrial Info is tracking more than $259 billion in proposed LNG projects in the U.S. Most of the larger facilities are focused on the Gulf Coast states of Texas and Louisiana. For more information, subscribe to Industrial Info's Global Project Platform.

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