Oregon asks feds to revoke license for Coos Bay LNG project

The Federal Energy Regulatory Commission conditionally approved the Jordan Cove LNG import terminal project and the associated, 234-mile Pacific Connector pipeline in December 2009.

The proposed terminal was designed to offload tankers full of super-chilled natural gas imported from Australia, Russia or the Middle East, regasify the liquid and ship it primarily to consumers in California over a pipe connected to the interstate distribution network. FERC okayed the project, deciding the public interest in such a project outweighed any environmental impacts.

Oregon appealed that decision because it said FERC had not objectively determined a need for such a facility, and that a domestic pipeline could meet the region's gas needs less expensively and with less environmental impact.

The gas market has since borne out the state's argument. Gas prices have tumbled as U.S. producers have used new drilling techniques to tap gas trapped in deep shale formations. Consequently, the economic rationale for building a terminal to import gas has collapsed.

In the meantime, a new domestic pipeline has been completed that will ship huge new supplies of Rockies gas from Wyoming to a distribution hub in Malin, on Oregon's border with California. That's the same hub where the Pacific Connector pipeline was proposed to bring the gas imported at Coos Bay.

In September, Jordan Cove's backers acknowledged the new market realities by applying to the Department of Energy for permission to export gas. In the application, they said they intended to ask FERC by mid 2012 to amend its license to cover a dual-use facility, with the capability to export gas to lucrative markets in Asia.

In a motion filed with FERC Friday, lawyers with the Oregon Department of Justice argued that any public benefit that may have existed with an import terminal no longer exists, and that the cost/benefit analysis fundamentally shifts when the project's purpose is to export gas.

The state contends gas exports will increase domestic prices and that environmental impacts of a gas liquefaction facility at the terminal have not been considered.

Opponents of the facility applauded the state's move, but said the state still holds a trump card, and can deny state land leases of its own accord.

"This is the right thing to do, to tell them we don't accept this bait and switch with Jordan Cove," said Dan Serres, an organizer with the conservation group Columbia Riverkeeper.

Bob Braddock, project manager for Jordan Cove, said he wasn't surprised by the DOJ's filing, as Attorney General John Kroger has made no secret of his opposition to any LNG terminal since before he took office.

Braddock said the public interest in the pipeline and export terminal includes jobs, tax revenue and pipeline interconnections that would bring a better gas supply to southern Oregon.

Braddock said Jordan Cove's parent company was still a month away from a final decision on whether to aggressively pursue an export license.

"The argument that there's no benefit to Oregon is fallacious," Braddock said. One basic question, he said, is "does Oregon feel there is an economic benefit to exporting products that, as a state, its doesn't produce, but its port facilities can handle?"