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LNG project hits another speed bump

Remember the Jordan Cove natural gas export project? It’s still limping along, but it’s facing new obstacles from the state of Oregon and from the global marketplace. Even if the project clears the regulatory hurdles, it faces a slumping market for liquefied natural gas and pending legal challenges to federal approval.

The Canadian company Pembina still seeks to build an export terminal and gas liquefaction plant on the North Spit of Coos Bay, and a 229-mile pipeline across Southern Oregon to supply it. The export facility would ship liquefied natural gas by tanker across the Pacific to Asian buyers.

Last week, the Oregon Land Use Board of Appeals sent back critical Coos County permits for further review.

The county approved the permits for a second time in 2019, but opponents appealed to LUBA, arguing the project did not meet public trust standards. LUBA agreed, citing concerns that tanker traffic would impede fishing vessels at critical times. The board also remanded a county permit for a wastewater treatment system that would discharge more than 2,800 gallons a minute of treated wastewater into the ocean.

Land-use rules prohibit sewer systems outside urban growth boundaries. LUBA said Coos County would have to prove that the proposed treatment is not a sewer system, and demonstrate that its impact would be “low-intensity” to approve the permit.

In addition to the latest setback, the project still lacks several key state permits, and LUBA in July revoked permits issued by the city of Coos Bay that would allow the project to dredge the estuary to allow tankers to enter.

Meanwhile, Pembina appears to be throttling back on this project and others. Industry website Natural Gas Intelligence reports that Pembina’s 2021 budget released this month calls for spending only $25 million on Jordan Cove for the entire year. The company also is shelving indefinitely a joint Alberta gas project involving a Kuwait business partner because of the COVID-19 pandemic. And Pembina is decreasing the declared value of its 50% share in the Ruby pipeline, which carries gas from Wyoming to Oregon, in part because of weak demand for Wyoming gas and the delays in securing Oregon regulatory permits.

The investment analysis firm S&P Global reports that Pembina sees opportunities in Canada as more favorable than in the U.S., primarily because of delays in securing permits for Jordan Cove. And although the company is sticking with Jordan Cove for now, it has not announced any firm long-term contracts with buyers, and global demand for LNG declined last year as a result of the pandemic.

Pembina has secured conditional approval of the Jordan Cove project from the Federal Energy Regulatory Commission, but opponents have filed court challenges that are still pending.

The Jordan Cove project originally was proposed as an import facility to bring gas from Asia for U.S. consumption, but the advent of fracking technology here increased the domestic supply and dropped the price below imported gas, so the project was switched to an export venture. It’s difficult to support the idea of a Canadian company selling Canadian and some U.S. gas to foreign buyers at the possible expense of Oregon’s natural environment.