Colorado City Pushes Hard for Liquefied Natural Gas Terminal in Oregon

GRAND JUNCTION, Colo. — Why would business leaders in this far western Colorado city of 60,000, nearly 1,200 miles from the Pacific Ocean, travel to Calgary, Alberta, to push for a port facility in Oregon to improve shipping to Japan? Three words: Liquefied natural gas.

With prices stuck at 1990s levels and storage overflowing with cheap and domestically abundant natural gas (thanks to fracking and directional-drilling technology), energy companies and the communities that rely on them are increasingly eying overseas markets, where prices are higher and demand for American gas is growing.

Several years ago, prompted by a Colorado Mesa University and Grand Junction Economic Partnership study, a group of 18 community and business leaders from Grand Junction traveled to Calgary to meet with the Canadian company Veresen and offer full support for its proposed Jordan Cove LNG project in Coos Bay, Oregon.

Part of that proposal, which has approval from the U.S. Department of Energy, is the 232-mile Pacific Connector Pipeline, which would link Coos Bay to the existing 680-mile Ruby Pipeline that runs from southern Oregon to western Wyoming.

The Ruby, which was built in 2010 for import purposes, could then link to northwestern Colorado gas fields via the Rockies Express Pipeline, which runs north to south from Wyoming to New Mexico.

Largely dormant gas plays in Wyoming, Colorado and New Mexico would suddenly be able to ship natural gas to Oregon, where it could then be cooled to -260 degrees Fahrenheit to reduce its volume and made into LNG for tanker shipment to Japan, which is increasingly relying on natural gas for electricity in the wake of the 2011 Fukushima nuclear disaster.

“All of a sudden there’s a pathway for the gas to flow west that’s not there now, and it kicks open that doorway and allows us to tell a different story about what our assets are and what value they have,” said David Ludlam, executive director of the West Slope Colorado Oil and Gas Association. “It’s sort of like just hooking up the end of a straw to Asia.”

Despite the DOE permit, the Jordan Cove project was rejected by the Federal Energy Regulatory Commission in March, primarily because FERC officials felt Veresen and its partners hadn’t demonstrated enough demand to outweigh the potential impacts to local landowners and concerned residents in Coos Bay and along the proposed Pacific Connector route.

That prompted Democratic Colorado Gov. John Hickenlooper to fire off a letter last month requesting a rehearing of the project by the FERC, which has yet to decide whether it will grant one.

“In denying the project, FERC will not only be denying the positive economic benefits to the development areas, it will also be denying the far-reaching benefits beyond the Pacific Northwest,” Hickenlooper wrote. “The project terminal is the only LNG facility on the West Coast that would directly link Colorado to new energy markets via the Ruby Pipeline.”

Since the FERC rejection, deals have been inked between Jordan Cove and Japanese JERA Co., the world’s largest LNG buyer, and another Japanese energy company, Itochu. And the Obama administration’s proposed Trans-Pacific Partnership trade deal could make the previously unheard-of concept of American LNG exports suddenly much simpler and put the U.S. on par with major LNG-exporting nations such as Qatar, Australia and Iran.

Grand Junction’s Ludlam calls Jordan Cove the “anti-Keystone XL” because it has such broad bipartisan support in Colorado and beyond, citing the state’s Democratic governor, as well as both its Republican and Democratic U.S. senators. The State Legislature also took up the cause, with the Senate approving a resolution of support in the waning days of the session.

There are concerns that connecting the country’s natural gas supplies to overseas markets will increase prices domestically and impact manufacturing, which has become accustomed to cheap gas in recent years. And natural gas also is viewed as a cleaner-burning alternative to coal in the effort to reduce global climate change, although methane leakage can reduce those benefits.

In coastal states such are Oregon and Washington, there are environmental concerns about the mounting pressure to build port facilities to accommodate coal, gas and oil shipments to Asia. One such proposed coal terminal in Bellingham, Washington was rejected earlier this week.

Objections range from the impacts of railcars loaded with coal and oil to the possibility of leaking pipelines or exploding production facilities.

“You certainly have concerns from landowners and communities and businesses that rely on healthy rivers and streams that are worried about a pipeline going through their property, going through sensitive environmental areas,” said Jan Hasselman, a staff attorney in the Seattle office of Earthjustice, which is is fighting Jordan Cove as it seeks state water permits from the Department of State Lands. “This area in Oregon is a very rugged, very dynamic landscape.”

But there are other reasons to object to the project and exporting LNG in general, he adds.

“The other set of concerns is around multi-billion-dollar investments in fossil fuel infrastructure at a time when we need to be rapidly moving in a different direction,” Hasselman said. “Exporting energy means more fracking in the West and all the attendant problems that that brings, and it sort of ensures decades more of burning fossil fuels instead of rapidly transitioning [to renewable sources such as wind and solar].”

Lawmakers in Colorado are torn on the issue, supportive of high-paying energy jobs in depressed rural areas but also concerned about the impacts from boom-and-bust extraction cycles.

“These are some of the best jobs, highest paying, as well as many of the energy companies are some of the biggest supporters or arts and recreation trails and baseball teams and all that kind of stuff,” said state Sen. Ellen Roberts, a Republican from Durango. “I don’t want them to leave the state. I want them to feel like we can have responsible energy development and have these good jobs.”

Former state Sen. Gail Schwartz, a Democrat who’s running to represent Colorado’s Western Slope in the U.S. Congress, said she doesn’t yet have a position on Jordan Cove, which is fully supported by her Republican incumbent opponent, Rep. Scott Tipton.

“I’m committed to a broad portfolio; I’m actually committed to an all-of-the-above energy policy . . .,” said Schwartz, who added much of the state’s energy extraction occurs on federal lands. “But it is also a situation that we’ve got to look at what are our traditional industries—agriculture, which relies on clean water, and then also recreation.

“When Colorado’s population will be doubling, supposedly, which is our projection in the water plan, we are only going to see more pressure on these public lands and the opportunities for our recreation and outdoor industries to thrive as a result of growth.”