CALGARY – Veresen Inc. has breathed new life into its proposed Jordan Cove liquefied natural gas project after reaching a deal to sell about 25 per cent of its output to Japanese utilities.
The Calgary-based company (TSX:VSN) says it has signed a preliminary agreement to sell at least 1.5 million tonnes a year of LNG from the project to JERA, a joint venture between Tokyo Electric Power Company and Chubu Electric Power Co.
“This agreement signals strong market support for the Jordan Cove LNG project from the world’s largest LNG buyer and represents a significant step forward in the project’s development,” said Versene chief executive Don Althoff.
The Jordan Cove project on Oregon’s coast at the port of Coos Bay has a proposed capacity of roughly six million tonnes per year.
The project hit a major roadblock March 11 when the U.S. Federal Energy Regulatory Commission denied Veresen’s application to build the LNG terminal and a pipeline from Canada to supply gas to the terminal.
FERC rejected the application in part because Veresen did not have sales contracts signed and so had not demonstrated a public benefit that would outweigh the potential for adverse impacts on landowners and communities.
Veresen said at the time that it would continue discussions with potential customers and request a rehearing of the regulatory decision.
The 20-year deal with JERA is still subject to conditions, including reaching a detailed tolling agreement and the project getting regulatory approval.
Veresen’s announcement comes as the many proposed west coast LNG projects face continued market uncertainty and regulatory delays.
In February, AltaGas halted development of the 500,000 tonne per year Douglas Channel LNG project in Kitimat, B.C., after failing to find buyers, while Royal Dutch Shell postponed an investment decision until late 2016 on its LNG Canada project that could scale to 24 million tonnes a year of LNG.
And Monday, federal Environment Minister Catherine McKenna extended the review period of the Petronas-led Pacific NorthWest LNG project by three months to further study the environmental impacts of that project.