Jordan Cove

A rendering of the proposed Jordan Cove LNG terminal in Coos Bay.

Federal regulators on Thursday approved the Jordan Cove liquefied natural gas export terminal in Coos Bay and the 230-mile Pacific Connector Pipeline, presaging a battle with Oregon, whose regulators have declined to issue the three most significant state permits for the facility.

The project’s owner, Calgary-based Pembina Pipeline Corp., immediately informed the Oregon Department of Land Conservation and Development that it intends to file a federal appeal to that agency’s decision last month that the project is inconsistent with state land use laws. Statute allows the company to appeal the decision to U.S. Secretary of Commerce Wilbur Ross, and the Trump administration is a firm backer of energy exports in general, and the Jordan Cove project in particular.

The notice of appeal the company sent to the agency Thursday may be a declaration of war with the state, however. Backers of the project have been promising locals for 15 years that they would comply with state and local permits, but Pembina is now signaling that it intends to preempt the state.

The federal decision and the notice of appeal immediately drew fire from Gov. Kate Brown and U.S. Sen. Ron Wyden, and Brown vowed the project wouldn’t move forward without following state permitting processes.

The Federal Energy Regulatory Commission voted 2-1 to approve the controversial project, effectively agreeing with a staff recommendation that most of the project’s impacts could be reduced to less than significant levels, and the public need for the facility outweighed any of those impacts.

Commissioner Richard Glick dissented, saying the decision violated the Natural Gas Act and the National Environmental Policy Act because it did not adequately consider the project’s greenhouse emissions or its impact on endangered species.

The commission’s chair, Neil Chatterjee, said Pembina now needs to obtain all necessary permits from the state.

Oregon’s Department of Environmental Quality denied the project’s water quality certificate last year. It did so in part for procedural reasons and said Jordan Cove could reapply. But it also said at the time that it had “insufficient information to demonstrate compliance with water quality standards, and because the available information shows that some standards are more likely than not to be violated.”

In January, the Department of State Lands rejected an extension request from Pembina for the project’s dredging permit, saying it had not received critical information.

And the Department of Land Conservation and Development last month said the project would have significant adverse effects on state lands. The state agency determined the project was not consistent with the state’s land use laws and said neither the Federal Energy Regulatory Commission nor the U.S. Army Corps of Engineers “can grant a license or permit for this project unless the U.S. secretary of commerce overrides this objection on appeal.”

Even if the commerce secretary decided to overturn the state’s land use decision, it’s not clear the project could obtain a water quality and dredging permit if the state is opposed.

Step forward

Pembina said in a news release Thursday that the decision from FERC represents the most significant step forward for Jordan Cove since Pembina acquired the project in 2017 in a merger with its owner, Veresen Inc.

“We appreciate FERC’s science-based approach to their review. The approval emphasizes yet again that Jordan Cove is environmentally responsible and is a project that should be permitted given a prudent regulatory and legal process was undertaken,” said Harry Andersen, Pembina’s senior vice president and chief legal officer.

The company did not address its difficulties with state permits, but emphasized that it had received approval from 14 local jurisdictions.

The company already has a somewhat fractious relationship with Oregonians. Its previous attempt to build a propane export terminal in Portland ultimately led the city to adopt a moratorium on development of all new fossil fuel infrastructure. Public hearings on its land use permit for the LNG terminal and pipeline drew tens of thousands of public comments. And the company’s chief executive, Mick Dilger, has made disparaging remarks to financial analysts about state regulators inability to handle permitting for a large hydrocarbon project.

Brown issued a statement Thursday saying she had long been clear that her position has been to ensure the neutrality and fairness of the state permitting process. But she said she was stunned by FERC’s decision to go forward with a decision at a time of national emergency.

“As the FERC chair stated earlier today, it is now incumbent on the company to secure all state permits. Currently, this project does not have a green light from state agencies,” she said. “I want to reiterate that I will not stand for any attempt to ignore Oregon’s authority to protect public safety, health and the environment," she said, adding that she had asked state lawyers to consider all appropriate legal action to assure state permitting processes will be followed.

"Let me be clear to the concerned citizens of southwest Oregon: until this project has received every single required permit from state and local agencies, I will use every available tool to prevent the company from taking early action on condemning private property or clearing land.”

Wyden, who serves on the Senate Committee on Energy and Natural Resources, said Thursday that he now opposes the project because of the way the Trump administration has stacked the deck on what is supposed to be a bipartisan commission. The Senate confirmed another Republican to the commission earlier last week, leaving it with three Republicans, one Democrat and one remaining empty seat.

"Today, a stacked and incomplete FERC approved the controversial and complicated Jordan Cove project,” Wyden said in a statement. “There was no rush. A balanced and full FERC should have made the decision.”

Wyden also said the commission had disregarded local private property rights and environmental concerns identified by Oregonians and the objections of three state agencies. “All this adds up to a clearly rigged process,” he said.

Economic headwinds

Besides permitting, the project faces strong economic headwinds. LNG prices are deeply depressed in Asia and would not support a new export project at current levels. Meanwhile, Pembina made the decision this week to slash its capital spending because of the collapse in oil prices.

A valid federal license to build the project, however, could be a marketable asset to a company with deeper pockets, as it would be the first LNG terminal on the West Coast. For years, other investors had sought to build a $6 billion LNG terminal and pipeline project in Warrenton, but that project collapsed in 2016 amid financial and regulatory setbacks.

If the Jordan Cove project went ahead, it would be the largest single construction project in state history, at a cost of some $10 billion. The liquefied natural gas export terminal would be built on the North Spit of Coos Bay, and its 230-mile feeder pipeline would traverse much of southern Oregon to a gas hub near Klamath County’s border with California.

The project would also make Oregon a bit player in the global oil and gas export market for decades, even as Brown and Democratic lawmakers seek to establish climate change policies that would severely limit the consumption of hydrocarbons in the state.

Few proposed projects have split the state so cleanly into vehement camps for and against.

Boosters believe it will spur a long-awaited economic revival in a once-flourishing industrial hub of the state that has struggled for decades with the decline in Oregon’s natural resource industries. They look to thousands of construction jobs, some 200 permanent positions at the terminal, and tens of millions of dollars in property taxes and fees the project will generate in Coos Bay and counties along the pipeline route.

Gas producing Western states are anxious to see the project greenlighted, as it would provide an export outlet for landlocked gas basins that don’t have a big market today.

“This represents a decadeslong path to creating jobs in construction, maintenance and operations throughout the western North American natural gas supply chain, as well as steady tax revenue and economic opportunities for rural communities and sovereign tribes in producing regions," said Andrew Browning, president of Western States and Tribal Nations, an advocacy coalition for rural economic development.

For opponents, Jordan Cove is a deal with the devil, a public safety, environmental and land rights nightmare in the making.

“Evidence in the record clearly indicates this Canadian project is anything but in the U.S. public interest,” Ron Schaaf, whose Klamath County land is on the pipeline route, said. “On behalf of landowners defending our rights, this decision will be challenged. Every American who cares about private property rights should be paying attention to the facts of this case.”

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