CALGARY ? In another setback for the Canadian liquefied gas industry, the U.S. Federal Energy Regulatory Commission has denied an application to construct a pipeline to provide gas to a proposed LNG project.
Calgary-based Veresen Inc. has been attempting to register customers because of its proposed Jordan Cove LNG plant on the coast of Oregon, but confirmed this week the work still had yet to sign its initial off-take agreement.
“We will provide some guidance to the market once we obtain a little closer and obtain our first buyer signed up,” Veresen president and CEO Don Althoff said during his company’s earnings call on Thursday.
On Friday, the FERC cited that lack of customers as the reason for denying a permit for that Pacific Connector pipeline that will link natural gas supplies towards the Jordan Cove project.
FERC commissioners wrote an order having said that the “authorization for commencement of construction would not be granted before the Pacific Connector has successfully executed contracts for a certain degree of service.”
Related
- Veresen working to sign up buyers for Jordan Cove LNG project in OregonVeresen ‘s US$6-billion Jordan Cove LNG project will not be sanctioned until late 2016’It’s a high-risk game': Veresen Inc puts everything on the line with Jordan Cove LNG bet
-
-
-
The order also said hello would not issue certificates to allow the work to proceed “in what we should find to be the lack of a demonstrated need for the pipeline.”
The decision will likely be a surprise as Althoff indicated the organization expected a positive outcome from FERC “in due course” for its Jordan Cove project, that is designed to deliver 6 million tonnes of LNG per year to power companies in Asia.
Althoff didn’t say when Jordan Cove could be sanctioned on Thursday, and Veresen did not react to a request comment Friday afternoon.
Analyst Steven Paget of FirstEnergy Capital said the news was “shocking” but perhaps shouldn’t have been given the regulator’s duty to make sure need before giving approval.
‘It’s an enormous surprise. I figured approval was very likely’
“It’s a huge surprise,” he said. “I figured approval was most likely.”
LNG project proponents have had a hard time securing buyers following a dramatic collapse in both global energy prices. Natural gas costs are linked to oil prices in many Asian markets.
In February, Calgary-based AltaGas Ltd. announced it was shelving its Douglas Channel LNG plant indefinitely because the company was not able to find customers in Asia because of its gas.
“The Douglas Channel consortium continues to be not able to secure meaningful off-take agreements for that project,” AltaGas CEO David Cornhill said.
Financial Post having a file in the Calgary Herald
gmorgan@nationalpost.com
Twitter.com/geoffreymorgan
