Lower natural gas prices may prove illusive even though California expects to be able to import more gas with both the Ruby Pipeline from Wyoming beginning this summer and a combined liquefied natural gas terminal-pipeline project in Oregon by mid-decade. That’s because the Oregon LNG terminal project may be turned into a gas export facility. Veresen--the company that assumed ownership of the terminal project in Oregon from Fort Chicago--quietly reported to its shareholders this past spring that it’s weighing a change of course. “Given current market conditions, Veresen is exploring alternative uses” for the planned terminal--the Jordan Cove Energy Project. The LNG terminal also includes the related $1 billion Pacific Connector Gas Pipeline backed by PG&E Corp., utility parent company. Both the terminal and pipeline are planned for Oregon to bring gas to California and the Northwest. Canada-based Veresen recently noted that “natural gas producers have expressed strong interest in converting Jordan Cove from an import facility into a liquefaction and LNG export facility.” Jordan Cove Energy project manager Bob Braddock explained that right now the company has no potential customers interested in contracting for capacity to import liquefied natural gas. However it does have companies interested in exporting gas, which is why it’s considering the liquefaction alternative. Braddock told Current the prospect of abundant shale gas is shifting perceptions about whether the U.S. will be a gas import or gas export nation (see story in Beltway section). Money is one key. The Malin gas hub is the other. If Jordan Cove turns into an export terminal, Rocky Mountain gas sent from Wyoming through the Ruby Pipeline to Malin could bypass California and Northwest states and instead flow through the Pacific Connector to the terminal for liquefaction and shipment to Asia. There, it goes for around $12/MMBtu, three times the roughly $4/MMBtu price paid for gas in California and much of the U.S., according to the Federal Energy Regulatory Commission. Interest in exporting gas is sweeping the nation. In fact, some liquefied natural gas terminal operators already have sought regulatory approvals to become exporters, driven by the dramatic increase in gas supply created by new technology, known as hydro-fracturing (fracking). It opens previously unreachable methane deposits locked in shale and tight sands formations. The technology, insist industry leaders like SoCal Gas president Michael Allman, assures California and the nation an ample and economical fuel supply for 100 years, not only to heat homes and run power plants, but to serve as a cleaner fuel for vehicles, particularly trucks and buses. Gas producers are tapping shale and tight sands formations in Wyoming and other Rocky Mountain states and in the Marcellus Shale of the East, which stretches through much of Appalachia. The shale rush is making natural gas more abundant, decreasing the need for imported LNG, and dampening prices, according to the Energy Information Administration. But that could be short-lived if LNG import terminals are converted to export terminals to take advantage of higher international gas prices. In essence, the new facilities--such as those planned in Oregon--eventually could open the way for U.S. gas to reach the highest price bidder anywhere in the world, pitting U.S. utilities like PG&E against bidders in Japan, China, or Latin America for domestically produced gas. Meanwhile, the Western Environmental Law Center is trying to halt the Oregon LNG terminal until FERC analyzes the environmental impacts of converting it into an export terminal, said center attorney Susan Jane Brown. “There’s changed circumstances surrounding the need for the project,” she said. Braddock said there would be little difference in the potential environmental impacts of the project if it were an export terminal instead of an import facility. Yet, he agreed that changing the designation likely would require the company to go through the whole permitting process anew.
