Veresen said that it has received a conditional order from the U.S. Department of Energy (DOE) to export liquefied natural gas from the proposed Jordan Cove LNG export terminal to those countries that do not have Free Trade Agreement (FTA) status with the United States.
Under the DOE order, Jordan Cove is permitted to export natural gas to meet Jordan Cove’s initial LNG capacity production of 6 million tonnes per annum (mtpa), with commercial LNG production targeted for early 2019. The DOE authorization is for a term of 20 years, commencing on the date of the first export.
Typically referred to as non-FTA countries, this includes numerous LNG consuming markets throughout Asia Pacific and South America. Among significant LNG importing countries, only South Korea, Singapore and Chile have FTA status with the United States. In late 2011, Jordan Cove LNG received DOE authorization to export up to 9 mtpa of LNG to those countries that currently have such FTA status.
“Receipt of DOE approval to export to U.S. non-FTA countries completes a key development milestone for Jordan Cove and brings us one step closer to making a final investment decision,” said Don Althoff, President and CEO of Veresen. “The next critical path item from a regulatory perspective is authorization from the U.S. Federal Energy Regulatory Commission to commence construction.”
DOE Import Authorization
On March 20, Veresen received authorization from the DOE to import natural gas from Canada to serve the proposed Jordan Cove LNG terminal. Consistent with the earlier approval from Canada’s National Energy Board to export gas supplies from Canada to the United States, the DOE import permit allows for up to 1.55 billion cubic feet per day of natural gas to be available for export via the Jordan Cove terminal for a 25-year period. This amount of natural gas would meet Jordan Cove’s ultimate capacity of 9 mtpa.
Jordan Cove’s advantageous location leverages existing North American pipeline infrastructure and will provide access to substantial markets for both Canadian and United States Rockies natural gas producers.
In addition to the non-binding Heads of Agreement (HOA) announced in October 2013, Veresen’s project level subsidiaries have further entered into a number of other HOAs with large-scale, prospective customers, including various emerging and traditional LNG buyers located throughout the Asia Pacific region.
The non-binding, non-exclusive arrangements set out the indicative commercial terms of the subsequent, binding, Liquefaction Tolling Services Agreement (LTSA) with the Jordan Cove LNG terminal, and the Transportation Service Precedent Agreement (TSPA) with the Pacific Connector Gas Pipeline that will transport natural gas supplies to the terminal.
The total volume of LNG capacity requested under the various HOAs exceeds the 6 mtpa capacity of the proposed LNG terminal. Veresen is pursuing the negotiation of binding LTSA and TSPA agreements with prospective HOA customers. The target objective, within 2014, is to execute binding agreements with an optimal subset of the HOA prospects, with binding commercial agreements being in place for all of Jordan Cove’s initial capacity of 6 mtpa.
Press Release, March 25, 2014; Image: Veresen