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Pembina sticks to first export timing for Jordan Cove LNG terminal amid FERC schedule delay

Increase font size  Decrease font size Date:2019-03-11   Views:20
Pembina Pipeline does not expect a recent delay in its US regulatory permit approval schedule to impact its current target for shipping its first cargo from its proposed Jordan Cove LNG export terminal in Oregon in 2024, the company said Thursday.

The Canadian company's project, which it inherited when it acquired Veresen in 2017, is among a dozen highly anticipated liquefaction terminals that are expected to make up the second wave of US capacity, following the three facilities that are currently operating and the three that are preparing to start up later this year.
Another of the proposed projects, NextDecade's Rio Grande LNG, said Thursday it formally secured a site lease agreement for its facility and continues to target a final investment decision by the end of the third quarter of this year. While market and commercial considerations have been a main sticking point for developers, regulatory hurdles have also hampered some of them. Some forecasts are projecting a global LNG shortage around the middle of the next decade if not enough of the new projects are built.

Blaming the 35-day partial US government shutdown that ended in January, the Federal Energy Regulatory Commission said on February 28 that it was pushing its expected final permit decision for Jordan Cove into 2020. The decision was expected in November, but now will not come until January. The project has been eagerly anticipated by Rockies gas producers that have been looking for new outlets for their supplies.

In an emailed statement, spokeswoman Justine Lissack said, "the updated FERC schedule is still within the time frame of Pembina reaching its business goal of first export in 2024." At the same time, she said the company believes that FERC and all agencies are mindful of the importance of their original schedules.

"We continue to work collaboratively and transparently with all appropriate cooperating federal and state agencies as we move through the public permitting process for this important project," Lissack said. "We look forward to FERC's publication of our Draft Environmental Impact Statement at the earliest possible adjusted date, and taking the next steps toward approval."

Jordan Cove is now on its second FERC permit application after its first one was rejected in 2016. Pembina has been aggressively pursuing long-term contracts with buyers of its capacity, and a plan to sell an equity stake in the project to a partner or partners.

Meanwhile, NextDecade has previously said that it expects to announce initial offtake contracts by the end of this month, and complete contracts in the second and third quarter to support up to three liquefaction trains at the time the developer makes its FID for its Brownsville terminal. Commercial operations are targeted to begin in 2023.

In a statement Thursday, NextDecade said it had secured a formal lease agreement with the Brownsville Navigation District, covering the approximately 984-acre site where Rio Grande LNG would be built.

CONTRACTOR SEARCH
NextDecade still must find a contractor to build the terminal, at a cost that would make the project viable. A deal with McDermott International was nixed in September 2018, after which NextDecade launched a competitive bid process to find a contractor. Final bids are due April 22.

NextDecade expects to receive a permit decision from the Federal Energy Regulatory Commission in July. Two other developers also have proposed LNG export terminals for Brownsville -- Texas LNG and Exelon-backed Annova LNG. FERC has expressed concerns about the cumulative impact of having three LNG export terminals built in Brownsville within a similar time frame.

Wells Fargo Securities analyst Michael Webber said in a note to clients Thursday that while it has been a very active time for US LNG export projects, uncertainty still remains.

"While we don't place much weight on company FID targets (and in many cases, none), we do track them as milestones/benchmarks," Webber said.
 
 
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