Page 5 - NorthAmOil Week 12

NorthAmOil COMMENTARY NorthAmOil
shows that some standards are more likely than nottobeviolated”.
Other departments will also be involved in issuing outstanding permits at the state level. In January, the Oregon Department of State Lands rejected an extension request from Pembina for the project’s dredging permit, saying it had not received critical information relating to the application. This led to Pembina withdrawing its application for the permit days later, amid spec- ulation that the application would be rejected outright at the end of January. The company will have to submit a new application in order to receive any further consideration from the department.
Meanwhile, the Department of Land Con- servation and Development said in February that Jordan Cove LNG would have significant adverse effects on state land. The department has argued that the project is not consistent with Oregon’s land use laws.
Oregon Governor Kate Brown has warned that the project cannot move forward unless it obtains all of the outstanding state permits.
“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.
Meanwhile, US Senator for Oregon Ron Wyden, a member of the Senate Committee on Energy and Natural Resources, has stated his opposition to the project. Wyden, a Democrat, cited the way in which the administration of US President Donald Trump has “stacked the deck” at the FERC, which is supposed to be a bipar- tisan commission. Earlier this month, another Republican, James Danly, was confirmed to fill a FERC seat, taking the commission’s compo- sition to 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.”
Indeed, FERC commissioner Richard Glick, the sole Democrat on the commission, voted against the Jordan Cove authorisation.
What next?
As well as state-level regulatory requirements, Jordan Cove – along with other proposed pro- jects – will face market headwinds as global energy demand drops as a result of the meas- ures various countries are adopting to combat COVID-19.
Jordan Cove, which would have a capacity of 7.5mn tonnes per year (tpy), is estimated to cost $10bn to build. However, the project is moving forward as the collapse in oil prices this month – coupled with already weak natural gas prices – is set to dampen the appetite for multi-billion dollar energy investments.
For the LNG industry, spot prices were already low before the COVID-19 pandemic started to affect demand in China and beyond. At the same time, buyers were increasingly shift- ing their focus away from the long-term offtake contracts that have tended to underpin projects that are built.
Now, oil and gas companies – including LNG developers – are slashing their capital budgets for 2020 in a bid to survive the increasingly chal- lenging commodity price environment. Given the worsening glut of LNG on the global market, it would not be surprising if other LNG develop- ers followed suit by cutting spending and delay- ing project investments.
Nonetheless, Pembina has described the FERC’s approval as “the most significant step forward for Jordan Cove” since it took over the project. The company still has some way to go, however, before it is likely to be in a position to make a final investment decision (FID) on the project.™
Jordan Cove,
which would have a capacity of 7.5mn tonnes per year (tpy), is estimated to cost $10bn to build.
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