Democratic future darkens prospects for LNG approvals

The gas infrastructure conference on Nov. 21 touched on LNG pricing and terminal construction, but never got into the political issues which are likely to bear on FERC’s approval of new LNG terminals.

An Obama FERC may be less sympathetic to LNG terminal/pipeline applications than the Bush FERC. That is because Jon Wellinghoff, one of the two current Democratic commissioners and a leading candidate to become chairman in an Obama administration, has already staked out an anti LNG position. In addition, President-elect Obama sponsored a Senate bill introduced in 2008 by Sen. Ron Wyden (D OR) which would cancel a provision in the 2005 energy bill which gave FERC sole authority to site LNG terminals.

Wellinghoff was the lone dissenting vote in September when FERC approved the latest terminal, the Bradwood Landing project in Oregon. Wellinghoff argued that building natural gas pipelines to Oregon was a much more environmentally sound way of getting gas – cheaper gas, for that matter – to the West Coast than building LNG terminals. Two additional Oregon LNG projects have already filed construction applications at FERC, and are the source of some controversy in Oregon. The Jordan Cove project involves an LNG import terminal to be located in the International Port of Coos Bay in Oregon. It is paired with a 230 mile Pacific Connector pipeline to be built by a partnership headed by Williams. The Oregon LNG project is comprised of a terminal at the mouth of the Columbia River which would send out its gas on a 117 mile pipeline. Those two Oregon projects and a third proposed by AES Sparrows Point LNG and Mid Atlantic Express, LLC are the three LNG applications sitting at FERC at the moment. The AES location would be in Baltimore, MD.

Bob Braddock, project manager for Jordan Cover Energy Project LP, says the incoming Obama administration “doesn’t particularly change the landscape” for LNG approvals at FERC. Even if FERC approves the next two Oregon projects, the state will only grant the necessary local permits to one of the three Oregon projects. Despite Wyden’s effort to eliminate FERC’s sole siting authority, Braddock thinks Oregon still holds the final card via its control of the granting of local permits. He, of course, hopes that FERC will approve Jordan Cove, whose principal partner with regard to the terminal is Fort Chicago Energy Partners, the company which owns the Alliance pipeline. Braddock says Jordan Cove has been working closely with the state even prior to the passage of the FERC “supremacy” amendment to the 2005 energy bill. “We have never hid under FERC’s skirts,” Braddock states. “Our relationship with the state is well established.”

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