The U.S. Department of Energy announced this week it will allow firms to export liquefied natural gas to international markets from the proposed Jordan Cove terminal on the southern coast of Oregon. The move brings natural gas producers in landlocked states like Wyoming closer to tapping into demand for the commodity overseas, proponents said.
U.S. Secretary of Energy Dan Brouillette issued an order this week authorizing up to 1.8 billion cubic feet a day of liquefied natural gas to be shipped out of the terminal. The Jordan Cove terminal has yet to be constructed, due in part to significant regulatory issues over the past decade. But if completed, it would be the only liquefied natural gas port on the West Coast.
Energy companies convert natural gas into a liquid using cold temperatures and pressure. In its liquid state, the commodity can be transported across the globe in ocean vessels.
“Today’s issuance to Jordan Cove serves to further expand opportunities for U.S. LNG abroad, particularly in the growing markets of Asia, and encapsulates what the Trump Administration has been working hard on for the past three years – providing reliable, affordable and cleaner-burning natural gas to our allies around the world,” Brouillette said in a statement on Monday.
Wyoming Rep. Chuck Gray, R-Casper, a longtime proponent of coal and LNG export terminals on the West Coast, welcomed the announcement.
“It’s great news that the Trump Administration has provided federal approval to the Jordan Cove project,” he said. “This project will create and sustain thousands of jobs in Wyoming.”
The Department of Energy’s authorization comes on the heels of the Federal Energy Regulatory Commission’s decision in March to give the green light to the Jordan Cove export terminal and corresponding 229-mile pipeline, called the Pacific Connector Pipeline. Though the state of Oregon challenged the approval, federal regulators declined to reconsider the decision in May.
Despite the federal endorsement for the project, the project’s owner, Canadian energy company Pembina Pipeline Corp., has yet to obtain the required state permits and cannot begin construction until it has done so.
Supporters of the terminal have insisted landlocked Wyoming could see high returns if the export terminal on the West Coast comes to fruition. For years, natural gas operators have looked for ways to tap into international demand for natural gas.
But some energy analysts contend liquefied natural gas prices in Asia remain too low, and the market too volatile, to make investment in the commodity worthwhile.
Along the way, the controversial export terminal has faced significant opposition for well over a decade. It’s also hit several roadblocks from state regulatory bodies.
Oregon’s Department of Environmental Quality blocked necessary water quality certificates last year. In another setback, Oregon Department of Land Conservation and Development objected to the project. Pembina Pipeline Corp. still needs to obtain a dredging permit from the Department of State Land, too.
The proposed facility has also faced significant protest from several environmental groups for well over a decade.
Constructing and operating the facility would significantly damage coastal ecosystems, crucial waterways and the climate, opponents say. According to the environmental impact statement, the terminal would also cough up over 2 million metric tons of greenhouse gas emissions each year. Environmental groups filed a lawsuit in May challenging the FERC’s vote to approve the terminal.
In March, Randall Luthi, chief energy adviser for Gov. Mark Gordon, called the export terminal simply a “glimmer on the far horizon.” Though supportive of making additional markets and export capacity available for Wyoming’s energy sectors, Luthi said it will likely take years before the export terminal is complete and the benefits trickle over to Wyoming.
The U.S. is one of the world’s leading exporters of liquefied natural gas. Export of the commodity increased by nearly 4,000 percent between 2015 and 2018. Facilities started popping up on the coasts left and right.
But the past year has tested the financial viability of the hot energy commodity. A decrease in demand, deflation in prices and market volatility during the COVID-19 pandemic have hit the industry hard.
On Wednesday, LNG futures prices in Asia hovered at $2.20 MMBtu, down from $12 MMBtu about a year and a half ago, according to analysis by energy finance analyst Clark Williams-Derry at the Institute for Energy Economics and Financial Analysis, an energy policy think tank. Meanwhile, liquefied natural gas export facilities around the U.S. are no longer running at their full capacity. Liquefied natural gas export facilities operate in Georgia, Louisiana, Maryland and Texas, shipping the commodity to over three dozen countries, primarily in Asia. On Wednesday, the country’s fleet operated at just 25% capacity. Williams-Derry called the slump in liquefied natural gas prices a “monumental market meltdown.”
Meanwhile, liquefied natural gas export facilities around the U.S. are no longer running at their full capacity. Liquefied natural gas export facilities operate in Georgia, Louisiana, Maryland and Texas, shipping the commodity to over three dozen countries, primarily in Asia. On Wednesday, the country’s fleet operated at just 25% capacity.
Williams-Derry called the slump in liquefied natural gas prices a “monumental market meltdown.”
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