On March 24, 2014, the Department of Energy granted a conditional order authorizing the export of domestically produced liquefied natural gas (LNG) from the Jordan Cove Energy Project, L.P. in Coos Bay, Oregon, to countries that do not have a Free Trade Agreement (FTA) with the United States. Jordan Cove is wholly owned and controlled by Veresen, Inc., a Canadian corporation based in Calgary, Alberta.
Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA, the Natural Gas Act directs the DOE to grant export authorizations unless it finds that the proposed exports “will not be consistent with the public interest.” While “public interest” is not defined by statute, the DOE has identified a range of factors that it evaluates when reviewing an application for export authorization, including economic impacts, international impacts, security of natural gas supply, and environmental impacts.
The Jordan Cove project includes plans to construct a liquefaction terminal, a 230-mile feeder pipeline and a natural gas-fired power plant to serve the liquefaction operation. The project will cost $7.5 billion in total, create thousands of construction jobs and 150 permanent positions, according to backers. Pursuant to the DOE’s conditional order, the facility is conditionally authorized to export at a rate of up to 0.8 billion standard cubic feet per day of LNG for a period of 20 years. Jordan Cove plans to export the LNG on its own behalf or as an agent for other entities holding title to LNG. The company will execute Liquefaction Tolling Agreements, under which an individual customer that holds title to natural gas will have the right to deliver that gas to Jordan Cove’s Terminal for liquefaction services and to receive LNG in exchange for a processing fee paid to Jordan Cove.
Jordan Cove is the seventh application, of more than 20, to receive the DOE’s conditional approval. So far only one project–Sabine Liquefaction, LLC, in Sabine Pass, Louisiana—has final federal approval to export natural gas and it is expected to begin doing so in late 2015. Before Jordan Cove and the other five projects that have won conditional approval can be built, they must get final clearance from the Federal Energy Regulatory Commission (as well as other federal and state agencies).
Most of the previous approvals have been on the Gulf Coast in southeastern Texas and Louisiana, but the new approval for the Jordan Cove Energy Project LP in Oregon would mean exporting LNG to Asia and beyond from the Pacific Northwest. In its press release Monday, Veresen announced that “Jordan Cove’s advantageous location leverages existing North American pipeline infrastructure and will provide access to substantial markets for both Canadian and United States Rockies natural gas producers.” Non-FTA markets include countries throughout Asia and South America. Among significant LNG importing countries, only South Korea, Singapore and Chile have FTA status with the United States.