Canada’s Pembina Pipeline Corporation says that it is ‘evaluating the path forward’ for its Jordan Cove LNG project in Oregon, US, which is set to be the first liquefaction plant on the US west coast.
The 7.5 million tpa Jordan Cove LNG project received US Federal Energy Regulatory Commission (FERC) approval in March 2020, but has since suffered a number of setbacks, including a failure to get the necessary permits from the State of Oregon. The US$10 billion (€8.25 billion) project will include two 160,000m3, full-containment LNG storage tanks and a 370 km pipeline from interconnections with the Ruby Pipeline and the Gas Transmission Northwest (GTN) Pipeline near Malin, Oregon to the LNG export terminal in Coos Bay, Oregon. It was originally slated to come onstream in 2025.
In its Q4 and full-year 2020 result announcement, Pembina says that regulatory and political uncertainty, the impact of COVID-19 and changing commodity prices led to $1.6 billion of non-cash after-tax impairments against the investments in Jordan Cove, Ruby, and the CKPC petrochemical joint venture with Petrochemical Industries Company.
‘We believe these opportunities remain in strategy, make economic sense when de-risked, and are aligned with Pembina’s [environmental, social and corporate governance] ESG priorities. We believe the time for these projects may come; however, we can sadly no longer predict with certainty when that time will be,’ says Pembina.
The company adds that it ‘continues to believe in the strategic rationale of Jordan Cove, which would be the first US west coast LNG facility and would benefit from advantaged access to Asian markets. Additionally, the project would bring significant economic benefits to Oregon and contribute to reducing global greenhouse gas emissions by displacing the use of coal globally.’
Overall, Pembina reported a Q4 loss of C$1.216 billion (€793 million) and an overall loss for the full year C$316 million. In Q4 2019, the company recorded earnings of C$150 million for Q4 and full-year earnings of C$1.5 billion. It blamed the losses largely on the impairment charge related to Jordan Cove, Ruby and CKPC. However, lower margins on NGL sales and higher unrealized losses on commodity-related derivatives also played a role, along with increased net finance costs due to higher interest expense as a result of higher debt levels due to its acquisition of Kinder Morgan Canada, and foreign exchange losses on the repayment of US dollar denominated debt. Pembina reported that excluding these impairments and tax recovery, Q4 earnings would have been C$338 million, and full-year earnings would have been C$1.23 billion.