Download the FERC decision as a pdf

In a decision that stunned supporters and critics alike, federal regulators Friday rejected plans for a massive liquefied natural gas export terminal in Coos Bay, saying applicants had not demonstrated any need for the facility.

The Federal Energy Regulatory Commission denied applications from the Calgary-based energy company Veresen Inc. and its pipeline collaborator, the Williams Partners, to locate the Jordan Cove Energy Project in the Southern Oregon coastal town, as well as a feeder pipeline that would have stretched halfway across the state.

Regulators said they were required to balance the need for any project against any adverse impacts it would have on landowners or the environment. The need for Jordan Cove was based entirely on demand for natural gas from customers in Asia, and with those markets in upheaval, Jordan Cove’s backers have yet to demonstrate that the demand exists.

Regulators noted that Veresen and Williams had signed no formal contracts to sell the terminal and pipeline capacity, and had not even held a successful “open-season” process to demonstrate informal interest in the facility.

Meanwhile, the companies had been unable to negotiate easements with more than 90 percent of 630 landowners along the 232-mile pipeline route, and would have required the widespread use of eminent domain to secure the necessary rights of way. The commissioners noted the landowners’ concerns with land devaluation, loss of revenue and harm to business operations, including timber, agriculture and oyster harvesting.

“Because the record does not support a finding that the public benefits of the Pacific Connector Pipeline outweigh the adverse effects on landowners, we deny Pacific Connector’s request…to construct and operate the pipeline,” the commission’s order said.

Without a pipeline, it was impossible to demonstrate any public benefit to the LNG terminal, so the commission denied that application. too.

Friday’s rejection came with a caveat: The two companies are free to reapply in the future, and the commission would consider their plans if they can demonstrate “a market need” for their product.

The decision was a stunner for all involved, from the project’s backers to property rights and environmental groups who have fought the plan since it was it first proposed as a gas import facility more than a decade ago.

“Clearly, we are extremely surprised and disappointed by the FERC decision,” said Don Althoff, chief executive of Veresen, which has spent hundreds of millions of dollars on the project. “The FERC appears to be concerned that we have not yet demonstrated sufficient commercial support for the projects. We will continue to advance negotiations with customers to address this concern.”

The company said Jordan Cove LNG and Pacific Connector will file a request for a rehearing of the decision.

Even Gov. Kate Brown’s office received no early word about the rejection. Brown has taken no formal position on the controversial project, though her predecessor had expressed support.

“We are currently reviewing the denial order internally and with the Oregon Department of Justice,” a spokesman told The Oregonian/Oregonlive when asked about Brown’s reaction.

Opponents, meanwhile, were thrilled. They have fought the project since 2004, when it was proposed as an import facility to supplement what were supposedly dwindling domestic gas supplies.  Backers switched the project to an export facility after North American gas production soared with the advent of hydraulic fracturing.

“This has been 12 years of my life,” said Jody McCaffree, a North Bend resident who formed the advocacy group Citizen’s Against LNG to take on the. “It gives you a bit of faith that sometimes the people can win with perseverance and hard work, even though you’re up against astronomical odds and deep pockets.”

“I’m ecstatic,” said John Clarke, a landowner in Winston whose rural property was bisected by the pipeline route. “I don’t know what to do. Jump in the air?”

The LNG terminal, its 232-mile feeder pipeline and a natural gas-fired power plant were expected to cost some $7.5 billion. Supporters expected thousands of construction jobs, 150 permanent positions and an ongoing flow of taxes and fees to a corner of the state that has been down on its luck for decades.

Building the pipeline would affect nearly 160 miles of private lands and the more than 600 landowners.

A proposal for a separate LNG terminal at the mouth of the Columbia River also hit a new stumbling block last week, when a lawyer for the city of Warrenton denied the Oregon LNG company’s application for a permit to build the facility.

Clatsop County has also denied permits for the feeder pipeline proposed to serve that project, which throws into doubt its ability to secure state land use approvals. And the project is mired in a dispute over its lease with the U.S. Army Corps of Engineers.