Jordan Cove answers challengers on FERC authorization in lengthy rebuttal

Washington — Questions of whether a saturated global LNG market can support the Jordan Cove LNG project are beyond the bounds of the US Federal Energy Regulatory Commission's review, project developers said in a lengthy filing backing the commission's recent signoff on the project.

Jordan Cove and the Pacific Connector Gas Pipeline on Tuesday submitted a 237-page filing in an effort to rebut multiple requests for rehearing of FERC's March 19 authorization of the 7.8 million mt/year LNG export terminal in Coos Bay, Oregon and the related 229-mile pipeline.

In addition to facing difficult market conditions for securing long-term offtake contracts, the first West Coast US export facility approved by FERC also faces robust legal opposition. A broad coalition of environmental groups, landowners and tribes, as well as others including Oregon state agencies, are among those that have asked FERC to reconsider its decision, in a step preceding appeals court challenges.

The broad coalition April 20 contended FERC's finding of market support for the pipeline is arbitrary, given the commission's refusal to look behind the precedent agreement with the single buyer, an affiliate of the pipeline. In reviewing the pipeline, the groups argued, FERC should have addressed the lack of evidence that the LNG export terminal itself has market support.

"The pipeline exists to supply the terminal, and the pipeline will not be used unless someone is purchasing LNG from the terminal," they argued.

In its answer, lawyers for Jordan Cove said Tuesday that as enshrined in the Energy Policy Act of 2005, FERC does not investigate or require evidence of market support for the terminal itself. Therefore, challenges to the demonstration of market need for the terminal are "erroneous."

Instead, it said, Congress created a statutory presumption that LNG terminals are in the public interest, and in this case there was no showing of inconsistency with the public interest to overcome that presumption.

Jordan Cove further argued the record was replete with evidence of benefits in the form of job creation, investment in infrastructure tax payments, and port modernization.

The light-handed review of LNG terminals envisioned by Congress is appropriate, it said, because terminal developers bear the full cost and risk of building the terminals.

DEBATE OVER SOURCE OF GAS

The project, and FERC's signoff, have also faced criticisms on the ground that US benefits of the pipeline were not supported if the gas turns out to be sourced from Canada.

To that Jordan Cove said it expects customers will likely source gas from Canada and the US, and in either case the US will benefit in the form of jobs and infrastructure development.

It backed FERC's reasoning that it is appropriate to credit contracts for transportation of gas headed for export as supporting a public convenience and necessity finding for a pipeline because exports can provide benefits to domestic markets such as bolstering supply and adding new transportation options.

In agreeing to authorize the pipeline, FERC held that precedent agreements with Jordan Cove covering nearly 96% the pipeline capacity are significant evidence of market need.

Multiple other matters were addressed in the Jordan Cove filing, including whether FERC adequately considered environmental impacts and landowner rights to a sufficient public use determination before their land is taken.

"Some requesters appear to disagree that promoting international trade is a valid public purpose at all. But the Constitution does not enact these requesters' (purported) preference for economic isolationism," lawyers for Jordan Cove wrote.

Separately, FERC acted Tuesday to deny one request for rehearing and stay by landowner Mark Sheldon, filed on April 13, on the ground that he did not file a motion to intervene and therefore is not a party.

CLEAN WATER ACT BATTLE

Also on Tuesday, FERC said it would accept comments for 30 days on a key petition filed by Jordan Cove asking FERC to declare that Oregon waived its right to review the projects under Section 401 of the Clean Water Act. Jordan Cove has argued that the state issued a denial on May 6, 2019, more than six months beyond the one-year statutory deadline.

Denial of state water quality certificates is one of the main points of leverage held by states in reviewing interstate gas projects.