154 FERC ¶ 61,190 UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Before Commissioners: Norman C. Bay, Chairman; Cheryl A. LaFleur, Tony Clark, and Colette D. Honorable. Jordan Cove Energy Project, L.P. Docket No. CP13-483-000 Pacific Connector Gas Pipeline, LP Docket No. CP13-492-000 ORDER DENYING APPLICATIONS FOR CERTIFICATE AND SECTION 3 AUTHORIZATION (Issued March 11, 2016) 1. On May 21, 2013, in Docket No. CP13-483-000, Jordan Cove Energy Project, L.P. (Jordan Cove) filed an application under section 3 of the Natural Gas Act (NGA) and Parts 153 and 380 of the Commission’s regulations to site, construct, and operate a liquefied natural gas (LNG) export terminal and associated facilities (Jordan Cove LNG Terminal or LNG Terminal) on the North Spit of Coos Bay in Coos County, Oregon. 2. On June 6, 2013, in Docket No. CP13-492-000, Pacific Connector Gas Pipeline, LP (Pacific Connector) filed an application under NGA section 7(c) and Part 157 of the Commission’s regulations for a certificate of public convenience and necessity to construct and operate an approximately 232-mile-long, 36-inch-diameter interstate natural gas pipeline originating near Malin, in Klamath County, Oregon, and terminating at the Jordan Cove LNG Terminal (Pacific Connector Pipeline). The Pacific Connector Pipeline will transport natural gas to the Jordan Cove LNG Terminal for processing, liquefaction, and export. Pacific Connector also requests a blanket certificate under subpart F of Part 157 of the Commission’s regulations to perform certain routine construction, operation, and abandonment activities, as well as a blanket certificate under subpart G of Part 284 of the Commission’s regulations to provide open-access transportation services. 3. As discussed below, the Commission denies Pacific Connector’s and Jordan Cove’s proposals. Docket Nos. CP13-483-000 and CP13-492-000 - 2 - I. Background 4. Jordan Cove and Pacific Connector are Delaware limited partnerships. Jordan Cove is authorized to do business in the State of Oregon, and has one general partner, the Jordan Cove Energy Project, L.L.C., and one limited partner, Jordan Cove LNG L.P. (a Delaware limited partnership that owns 100 percent of Jordan Cove and Jordan Cove Energy Project, L.L.C.).1 Pacific Connector is authorized to do business in the states of Oregon, California, and Utah. Pacific Connector has one general partner, Pacific Connector Gas Pipeline, LLC (who owns a one percent interest)2 and two limited partners, Williams Gas Pipeline Company, LLC3 and Jordan Cove LNG L.P. (who each own a 49.5 percent interest). 5. Jordan Cove and Pacific Connector are new companies. Upon construction and operation of their proposed facilities, Jordan Cove and Pacific Connector would be subject to the Commission’s jurisdiction under the NGA. II. Proposals 6. The applicants designed the Jordan Cove LNG Terminal and the Pacific Connector Pipeline Projects (referred to collectively as “the projects”) to enable the production of up to 6.8 million metric tons per annum (MMTPA) of LNG, using a feed of approximately 1.04 billion standard cubic feet per day (Bcf/d) of natural gas, for export to international or domestic markets in the non-contiguous United States.4 1 Jordan Cove LNG L.P. is wholly owned and controlled by Veresen Inc., an Alberta, Canada Corporation. See Jordan Cove’s October 8, 2015 filing at 6 and Exhibit B. 2 Pacific Connector Gas Pipeline, LLC is a Delaware limited liability company equally owned by Williams Gas Pipeline Company, LLC and Jordan Cove LNG L.P. See Jordan Cove’s April 23, 2014 filing stating that Fort Chicago LNG II U.S. L.P. (listed in Pacific Connector’s application as a part owner of the Pacific Connector Gas Pipeline, LLC) changed its name to Jordan Cove LNG L.P. 3 Williams Pacific Gas Pipeline Company, LLC is a wholly-owned subsidiary of The Williams Companies, Inc. 4 We note that while Jordan Cove asserted in its application that there is a need for its project to serve current and future domestic needs, stating “the Project will be able to provide access to LNG to meet the demand of isolated markets in Hawaii . . . and the Cook Inlet region of Alaska,” Jordan Cove has not filed an application for a certificate of (continued…) Docket Nos. CP13-483-000 and CP13-492-000 - 3 - 7. The Pacific Connector Pipeline would carry natural gas to the Jordan Cove LNG Terminal, where the natural gas will be liquefied, stored in cryogenic tanks, and loaded onto ocean-going vessels. The applicants state that the projects will enable natural gas produced in western Canada and the United States’ Rocky Mountains to serve markets in Asia, southern Oregon, and, potentially, Hawaii and Alaska.5 A. The Jordan Cove LNG Terminal Proposal in Docket No. CP13-483-000 8. Jordan Cove seeks authorization under NGA section 3 to site, construct, and operate an LNG export terminal that would consist of: • a natural gas conditioning facility with a combined natural gas throughput of approximately 1 Bcf/d; • four natural gas liquefaction trains that would each process approximately 1.5 MMTPA of LNG; • a refrigerant storage and resupply system; • an aerial cooling system; • two full-containment LNG storage tanks, each with a capacity of 160,000 cubic meters (m3) (or 1,006,000 barrels), and each equipped with three fully submerged LNG in-tank pumps sized for approximately 11,600 gallons per minute; • an LNG transfer line consisting of one 2,300-foot-long, 36-inch-diameter line that would connect the shore-based storage system with the LNG loading system; • an LNG carrier cargo loading system consisting of three 16-inch loading arms and one 16-inch vapor return arm; • a LNG carrier loading berth capable of accommodating LNG carriers with capacities from 148,000 m3 to 217,000 m3; public convenience and necessity authorizing it to transport or sell for resale gas in interstate commerce. The section 3 authorization it has requested extends only to operations in foreign commerce. 5 See id. Jordan Cove would need to apply for and receive authorization under section 7(c) of the NGA prior to processing any gas for transportation in interstate commerce. Docket Nos. CP13-483-000 and CP13-492-000 - 4 - • a utility corridor to serve as the primary roadway and utility interconnection between the LNG terminal and the South Dunes Power Plant; • a boil off gas recovery system; • electrical, nitrogen, fuel gas, lighting, instrument/plant air and water facility systems; • an LNG spill containment system, fire water system and other hazard detection, control and prevention systems; and • utilities, buildings, and support facilities. 9. The Jordan Cove LNG Terminal will be located within about 400 acres of open and industrial land across two contiguous parcels (an eastern and western parcel).6 The parcels are located on the bay side of the North Spit of Coos Bay in unincorporated Coos County, Oregon, north of the towns of North Bend and Coos Bay. B. Pacific Connector Gas Pipeline 1. Facilities 10. Pacific Connector requests authorization under NGA section 7(c) to construct and operate a new 232-mile-long interstate natural gas transmission system designed to deliver up to 1.06 Bcf/d of natural gas from interconnects with Ruby Pipeline LLC (Ruby) and Gas Transmission Northwest LLC (GTN) near Malin, Oregon, to the Jordan Cove LNG Terminal. In addition to delivering natural gas to the LNG terminal, Pacific Connector states its pipeline would provide deliveries in southern Oregon through an interconnection with Northwest Pipeline GP’s (Northwest) Grants Pass Lateral.7 The proposed Pacific Connector Pipeline would consist of the following facilities: • approximately 232 miles of 36-inch-diameter pipeline and appurtenant facilities8 traversing Klamath, Jackson, Douglas, and Coos counties, Oregon; 6 The two parcels are owned by Jordan Cove. 7 Northwest’s Grants Pass Lateral is a 131-mile-long pipeline system extending from Eugene to Grants Pass, Oregon. 8 Appurtenant facilities include five pig launchers and receivers and 17 block valves spaced along the pipeline route in compliance with U.S. Department of Transportation regulations. Docket Nos. CP13-483-000 and CP13-492-000 - 5 - • a natural gas compressor station (Klamath Compressor Station), located on a 31-acre site in Klamath County, Oregon, containing three 20,500 horsepower (HP) compressor units9 for a total of 41,000 HP of compression; • appurtenant facilities, including a compressor building, suction/discharge piping, and final discharge coolers, a mainline block valve, and a pig launcher assembly;10 • the Jordan Cove Delivery Meter Station, that would have a capacity of approximately 1.020 Bcf/d of natural gas at 850 psig, located at the terminus of the Pacific Connector Pipeline at milepost (MP) 1.47, consisting of multiple large ultrasonic gas flow meters, a gas chromatograph, two gas filter/separators, flow control, electronic flow measurement, communications equipment, a building to house the equipment, a mainline block valve, and a pig receiver;11 • the Clarks Branch Delivery Meter Station, with a maximum design capacity of approximately 40 million cubic feet per day (MMcf/d) at 900 psig located at an interconnect with Northwest’s existing Grant’s Pass Lateral at MP 71.46 in Douglas County, Oregon, consisting of an 8-inch ultrasonic gas flow meter, a gas chromatograph, gas separator, flow control, overpressure protection, electronic flow measurement, communications equipment, a building to house the equipment, a mainline block valve, a pig launcher assembly, and a pig receiver assembly; • the Klamath-Beaver Receipt Meter Station, with a maximum design capacity of approximately 1.06 Bcf/d at 900 psig located at an interconnect with GTN’s mainline in Klamath County, Oregon, within the Klamath Compressor Station site, consisting of multiple large-diameter ultrasonic gas flow meters, gas piping and valves, gas chromatograph, flow control, electronic flow measurement, communications for voice and data transfer, and a building to house the equipment; 9 The third 20,500 HP compressor unit is proposed for standby purposes; only two units will operate at any given time. 10 A pig is a tool for cleaning and inspecting the inside of a pipeline. 11 Pacific Connector states that it would enter into an operational balancing agreement with Jordan Cove prior to the in-service date of these facilities. Docket Nos. CP13-483-000 and CP13-492-000 - 6 - • the Klamath-Eagle Receipt Meter Station, with a maximum design capacity of approximately 1.06 Bcf/d at 900 psig located at an interconnect with Ruby’s mainline in Klamath County, Oregon, on the Klamath Compressor Station site, consisting of multiple large-diameter ultrasonic gas flow meters, gas piping and valves, gas chromatograph, flow control, electronic flow measurement, communications for voice and data transfer, and a building to house the equipment;12 and • communications towers installed at each meter station and at the Klamath Compressor Station to connect Pacific Connector’s system to Northwest’s existing backbone microwave system, which provides communications with Northwest’s gas control center. Additionally, Pacific Connector would utilize Northwest’s existing Harness Mountain communications site in Douglas, County, Oregon and would lease space on seven other existing communication towers in Coos, Douglas, Jackson, and Klamath counties, Oregon. 11. Pacific Connector states that the initial firm design capacity of its proposed pipeline system is 1.06 Bcf/d and the maximum allowable operating pressure (MAOP) for the pipeline would be 1,480 psig. Pacific Connector explains that the design assumes 40 MMcf/d would be reserved for the Clark’s Branch Delivery Meter Station and 1.02 Bcf/d would be reserved for the Jordan Cove Delivery Meter Station at the terminus of the Pacific Connector Pipeline. Pacific Connector estimates that the cost of the Pacific Connector Pipeline is approximately $1.74 billion.13 2. Request for Blanket Certificates 12. Pacific Connector requests a blanket certificate under subpart F of Part 157 to perform routine construction, maintenance, and operational activities related to its proposals. Pacific Connector also requests a blanket certificate under subpart G of Part 284 to provide open-access firm and interruptible transportation services for its customers. 12 Pacific Connector states that it would provide contributions-in-aid-of- construction for Northwest’s, GTN’s, and Ruby’s construction of the interconnect facilities and would enter into an operational balancing agreement with each company prior to the in-service date of the respective facilities. 13 The cost estimate is in “as spent” dollars based on a November 1, 2017 in- service date. Docket Nos. CP13-483-000 and CP13-492-000 - 7 - 3. Markets and Services 13. Pacific Connector states that it proposes the Pacific Connector Pipeline, which it has characterized as an integral component of the Jordan Cove LNG Terminal,14 in response to rising international demand for United States’ and Canadian natural gas supplies. Pacific Connector explains that its pipeline will provide market outlets to transport western Canadian and United States’ Rocky Mountain natural gas supplies for export through the Jordan Cove LNG Terminal. Pacific Connector states that the pipeline also will be capable of delivering gas to markets in southern Oregon through an interconnection with Northwest’s Grants Pass Lateral, but that these markets alone are not sufficient to drive the investment in the pipeline.15 Therefore, Pacific Connector states that if the pipeline’s capacity is not substantially subscribed and if the Jordan Cove LNG Terminal is not contracted, it will not build the pipeline.16 14. Pacific Connector has not conducted an open season for its proposed transportation capacity, and has not submitted any precedent agreements or contracts with, or subsequent to, the filing of its application. In its application, Pacific Connector stated that it would keep the Commission apprised of its plans to conduct an open season and enter into precedent agreements for the pipeline’s capacity. 15. On May 7, 2014, Commission staff sent Pacific Connector a data request asking it to provide the current status of: (1) Jordan Cove’s negotiations for liquefaction contracts for the Jordan Cove LNG Terminal; and (2) Pacific Connector’s actions to conduct an open season and enter into precedent agreements for pipeline capacity. On May 15, 2014, Pacific Connector responded and stated that Jordan Cove had entered into non- binding Heads of Agreements with various Asian companies for liquefaction and transportation capacity. Pacific Connector stated that the Heads of Agreements generally provided for pipeline precedent agreements to be executed by October 2014, upon which it would conduct an open season (in October/November 2014). 16. On December 5, 2014, Commission staff sent Pacific Connector another data request asking Pacific Connector to update the Commission on the results of its October/November 2014 open season. On December 10, 2014, Pacific Connector responded, stating that Jordan Cove was still negotiating under the non-binding Heads of Agreements, the terms of which had been extended into early 2015. Pacific Connector 14 Pacific Connector’s June 1, 2015 Data Response at 2. 15 Pacific Connector’s Application at 7. 16 Id. at 9. See also Pacific Connector’s June 1, 2015 Data Response at 2. Docket Nos. CP13-483-000 and CP13-492-000 - 8 - explained that the extended Heads of Agreements generally provided for pipeline precedent agreements to be executed by those shippers choosing to make binding commitments by the first or second quarter of 2015, and that it anticipated holding an open season upon execution of those agreements, in the second quarter of 2015. 17. On May 20, 2015, Commission staff sent Pacific Connector a third data request, explaining that the Commission’s Certificate Policy Statement requires the Commission to balance the public benefits of a pipeline proposal against its potential adverse impacts, and that Pacific Connector must show that the public benefits of its proposal outweigh the project’s adverse impacts. The data request further explained that while the Commission no longer requires an applicant to present contracts for any specific percentage of proposed new capacity, contracts or precedent agreements always serve as important evidence of project demand. Commission staff then asked Pacific Connector to identify the date it held or will hold an open season and, in the event it does not enter into agreements for service prior to the time the Commission has completed its review of the applications, what evidence in the record Pacific Connector is relying on to show that the benefits of the project outweigh the potential adverse impacts. On June 1, 2015, Pacific Connector responded, stating that would not hold an open season in the second quarter of 2015, but would do so upon the execution of pipeline precedent agreements for at least 90 percent of the pipeline’s design capacity, which it anticipated would happen by the end of 2015. Further, Pacific Connector stated that if Jordan Cove does not execute liquefaction agreements for the LNG terminal’s capacity, transportation service agreements for service on Pacific Connector will not be executed and it will not build the pipeline. Finally, Pacific Connector stated that the U.S. Department of Energy (DOE) had authorized Jordan Cove’s export of LNG to free trade agreement and non-free trade agreement nations, consistent with the public interest. Thus, because the Pacific Connector Pipeline is an integral component of the Jordan Cove LNG Terminal, the pipeline’s “public benefits encompass all the public benefits of the Jordan Cove [T]erminal.”17 18. Finally, on October 14, 2015, Commission staff sent Pacific Connector a fourth data request asking Pacific Connector to discuss: (1) the negotiations between Jordan Cove, Pacific Connector, and any potential liquefaction and transportation customers; (2) whether Pacific Connector entered into any commitments for firm service on the pipeline; and (3) if Pacific Connector entered into precedent agreements, when did or when will it conduct an open season. On November 4, 2015, Pacific Connector replied stating that negotiations between Jordan Cove, Pacific Connector, and prospective customers are “active and ongoing.” Pacific Connector stated it “remains confident that 17 Pacific Connector’s June 1, 2015 Data Response at 2. Docket Nos. CP13-483-000 and CP13-492-000 - 9 - these customers will enter into binding long-term [agreements]” with both Jordan Cove and Pacific Connector. Pacific Connector again emphasized that given “the significant capital costs associated with this project, Pacific Connector and Jordan Cove must have committed customers with executed agreements in place before making the ultimate decision to move forward on construction of the project” and pledged that it “will adhere to the [C]ommission’s standard … condition that service agreements for the pipeline be executed prior to the commencement of construction.”18 Pacific Connector did not provide an estimated date that agreements would be finalized. Pacific Connector also provided information indicating that it had obtained easements for only 5 percent and 3 percent, respectively, of its necessary permanent and construction right of way. III. Procedural Matters A. Notice, Interventions, Comments, and Protests 19. Notice of Jordan Cove’s application was published in the Federal Register on June 6, 2013 (78 Fed. Reg. 34,089), establishing June 20, 2013, as the due date for filing motions to intervene and protests. The parties listed in Appendix A filed timely, unopposed motions to intervene in Docket No. CP13-483-000.19 Timely notices of intervention in Docket No. CP13-483-000 were filed by the National Marine Fisheries Service (NMFS) and jointly by the Oregon Department of Environmental Quality (Oregon DEQ) and the Oregon Department of Fish and Wildlife (Oregon DFW).20 18 Pacific Connector’s November 4, 2015 Data Response at 1. 19 Timely, unopposed motions to intervene are granted by operation of Rule 214 of the Commission’s Rules of Practice and Procedure. See 18 C.F.R. § 385.214 (2015). 20 The timely notices of intervention filed by NMFS and Oregon DEQ and Oregon DFW are granted by operation of Rule 214(a)(2) of the Commission’s Rules of Practice and Procedure and are listed as parties in Appendix A. 18 C.F.R. § 385.214(a)(2) (2015). On June 20, 2013, Landowners United and Clarence Adams, jointly, filed a pleading titled “Notice of Intervention” in Docket No. CP13-483-000. Notices of Intervention may only be filed by a State Commission; the Advisory Council on Historic Preservation; the U.S. Departments of Agriculture, Commerce, and the Interior; any state fish and wildlife, water quality certification, or water rights agency; or Indian tribe with authority to issue a water quality certification. 18 C.F.R. § 385.214(a)(2) (2015). However, Landowners United’s and Clarence Adams’ pleading was timely filed and satisfied all of Rule 214’s requirements for filing a motion to intervene. Accordingly, we grant Landowners United and Clarence Adams party status. Docket Nos. CP13-483-000 and CP13-492-000 - 10 - 20. Notice of Pacific Connector’s application was published in the Federal Register on June 26, 2013 (78 Fed. Reg. 38,306), establishing July 10, 2013, as the due date for filing motions to intervene and protests. The parties listed in Appendix B filed timely, unopposed motions to intervene in Docket No. CP13-492-000.21 NMFS and Oregon DEQ and Oregon DFW (jointly) also filed timely notices of intervention in Docket No. CP13-492-000.22 21. Late motions to intervene were filed by nine parties in Docket No. CP13-483-000 and by eight parties in Docket No. CP13-492-000.23 We grant the late motions to intervene. 24 22. Sierra Club filed a protest in Docket Nos. CP13-483-000 and CP13-492-000. On July 3, 2013, Jordan Cove filed an answer to Sierra Club’s protest. The Commission’s Rules of Practice and Procedure do not permit answers to protests and we deny Jordan Cove’s answer.25 21 Timely, unopposed motions to intervene are granted by operation of Rule 214 of the Commission’s Rules of Practice and Procedure. See 18 C.F.R. § 385.214 (2015). 22 The timely notices of intervention filed by NMFS and the Oregon DEQ and the Oregon DFW are granted by operation of Rule 214(a)(2) of the Commission’s Rules of Practice and Procedure and are listed as parties in Appendix B. 18 C.F.R. § 385.214(a)(2) (2015). 23 In Docket No. CP13-483-000, late motions to intervene were filed by: Clam Diggers Association of Oregon; Clausen Oysters and Lilli Clausen (as an individual); Coos Bay Oyster Company and Jack Hempell (as an individual); Dennis and Karen Henderson (as individuals and as trustees of the Henderson Revocable Intervivos Trust); Evans Shaaf Family LLC and Deborah Evans and Ronald Schaaf (as individuals); Jerry S. Palmer; John M. Roberts, Jr.; Sierra Club; and Waterkeeper Alliance. In Docket No. CP13-492-000, late motions to intervene were filed by: Clam Diggers Association of Oregon; Clausen Oysters and Lilli Clausen (as an individual); Coos Bay Oyster Company and Jack Hempell (as an individual); Dennis and Karen Henderson (as individuals and as trustees of the Henderson Revocable Intervivos Trust); Evans Shaaf Family LLC and Deborah Evans and Ronald Schaaf (as individuals); John F. Caughell and Tammy S. Bray; Stacey and Craig McLaughlin (as individuals); and Waterkeeper Alliance. 24 18 C.F.R. § 385.214(d) (2015). 25 18 C.F.R. § 385.213(a)(2) (2015).