United States: LNG Update: Jordan Cove LNG Export Facility

In early December, the FERC denied requests for rehearing of its March 11, 2016 Order denying the applications of Jordan Cove Energy Project, L.P. ("Jordan Cove") to site, construct and operate an LNG export terminal in Coos Bay Oregon ("Jordan Cove LNG Terminal") and Pacific Connector Gas Pipeline, LP ("Pacific Connector") to construct and operate an approximately 232-mile interstate natural gas pipeline originating at the Oregon/California border and terminating at the Jordan Cove LNG Terminal ("Pacific Connector Pipeline").55

Under the Natural Gas Act, FERC authorizes the construction and operation of interstate natural gas pipelines and on-shore LNG terminals. FERC's March 11 Order surprised industry observers because it denied authorization for a proposed LNG export project for the first time since FERC began considering large-scale LNG export projects in 2012. FERC found Pacific Connector, which would supply natural gas from western Canada and the US Rocky Mountain region to the Jordan Cove LNG Terminal, failed to demonstrate a need for the Pacific Connector Pipeline outweighing the potential harm to the economic interests of landowners whose property rights might be taken by Pacific Connector's exercise of eminent domain. Having denied Pacific Connector's application, FERC also denied Jordan Cove's application because the Jordan Cove LNG Terminal is not feasible without a pipeline to transport natural gas to the terminal.56

Pacific Connector and Jordan Cove filed requests for rehearing of FERC's March 11 Order, as did the State of Wyoming and the Wyoming Pipeline Authority.

Pacific Connector and Jordan Cove asked FERC to stay the March 11 Order and reopen the record to permit the submission of two long-term agreements executed by Jordan Cove for the export of LNG from the Jordan Cove LNG Terminal, and three precedent agreements for long-term transportation service executed by Pacific Connector. According to Jordan Cove, the agreements executed by Pacific Connector together accounted for 77 percent of the capacity of the Pacific Connector Pipeline. Pacific Connector and Jordan Cove argued that the agreements, which were executed after FERC issued the March 11 Order, are sufficient evidence of market need to support approval of the Pacific Connector Pipeline and the Jordan Cove LNG Terminal.

In its joint request for rehearing, Wyoming argued that in the March 11 Order, FERC failed to consider the benefits of the Pacific Connector Pipeline to the Wyoming economy and should have allowed Pacific Connector and Jordan Cove more time to demonstrate market support for the Pacific Connector Pipeline and the Jordan Cove LNG Terminal.

In its December 9 Order, FERC denied the requests to reopen the record and denied rehearing of the March 11 Order. FERC held that Pacific Connector and Jordan Cove had failed to demonstrate "extraordinary circumstances" to support reopening the record over the need for finality in FERC's decisions. FERC observed that before filing its rehearing request, Pacific Connector had every opportunity to demonstrate market need for the Pacific Connector Pipeline, but had failed to do so over a three-and-a-half-year period, during which FERC staff had issued four data requests seeking such information.

FERC stated that under its policy for authorizing interstate natural gas pipeline projects, Pacific Connector could have relied on a variety of relevant factors to demonstrate need, including precedent agreements, demand projections, potential cost savings to consumers or a comparison of projected demand with the amount of capacity currently serving the market. However, Pacific Connector failed to show any evidence of market demand for its project that would satisfy the factors listed in the Certificate Policy Statement.

FERC reiterated that its denial of Pacific Connector's certificate application is "without prejudice to Jordan Cove and/or Pacific Connector submitting a new application . . . should the companies show a market need for these services in the future." FERC expressed its concern that Pacific Connector and Jordan Cove submitted evidence of market demand within 30 days of the March 11 Order, yet failed to provide such evidence after receiving four data requests during a three-and-a- half-year period. FERC stated that it "expects that the Applicants will submit evidence of market need as part of their initial application, or in a timely manner in response to staff data requests, so that the Commission can appropriately consider such evidence as part of the certificate application."

Wyoming argued that FERC should have considered the benefits of the Pacific Connector Project on the State of Wyoming, including increased natural gas production, employment and tax and royalty income. In response to Wyoming's arguments on rehearing, FERC stated that generalized claims of need for the Pacific Connector Pipeline, including a generalized statement of benefits to Wyoming, do not outweigh the risk of Pacific Connector's exercise of eminent domain on landowners and communities. FERC also found that the issue of whether the export of LNG from the Jordan Cove LNG Terminal will cause economic harm or benefit is not within the purview of FERC in determining whether to authorize pipeline facilities under the Natural Gas Act.

Pacific Connector, Jordan Cove and Wyoming have the right to seek judicial review of FERC's orders. However, on December 15, Jordan Cove announced in a press release that it will file a new application for the Pacific Connector Pipeline and the Jordan Cove LNG Terminal. When it does, it may not be starting from square one with respect to environmental review of the projects. In the December 9 Order, FERC indicated that it "may use portions of the existing record, i.e. the September 2015 Final Environmental Impact Statement, to process that filing."57

Pacific Connector and Jordan Cove may have reason to be optimistic about the reception their new application will receive after January 20, 2017. Since becoming President on January 20, Donald Trump has the ability over the next several months to appoint four new FERC commissioners, including three from his party, and to designate the new FERC Chairman from among those new commissioners. In a September 22, 2016 speech in Pittsburgh, then-Republican presidential candidate Trump claimed that the Obama Administration had "blocked or abandoned" several energy transportation projects, including "a $6.8 billion liquid natural gas export facility," presumably a reference to FERC's denial of authorization for the Jordan Cove LNG Terminal and the Pacific Connector Pipeline.

Jordan Cove and Pacific Connector have not indicated when they will file a new application with FERC. However, with the resignation of former FERC Chairman Norman Bay as of February 3, 2017, FERC will now have only two commissioners and, consequently, does not have a quorum necessary to vote on proposed orders. FERC will not have the ability to act on a new application filed by Jordan Cove and Pacific Connector until President Trump nominates, and the Senate confirms, at least one new FERC commissioner.

Footnotes

55. Jordan Cove Energy Project, L.P., et al., "Order Denying Rehearing," 157 FERC ¶ 61,194 (2016) ("December 9 Order").

56. Jordan Cove Energy Project, L.P., and Pacific Connector Gas Pipeline, LP, "Order Denying Applications for Certificate and Section 3 Authorization," 154 FERC ¶ 61,190 (2016) ("March 11 Order").

57. December 9 Order at n.28.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.