Pembina no longer predicting Jordan Cove LNG completion

Pembina Pipeline Corp. said it can no longer predict when it might complete work on its 7.8-million tonne/year (tpy) Jordan Cove LNG plant in Coos Bay, Ore., and was evaluating the project’s path forward in light of regulatory and political uncertainty. The company’s fourth-quarter and full-year 2020 earnings were negatively impacted by $1.6 billion of non-cash after-tax impairments related to Jordon Cove, its Canada Kuwait Petrochemical Corp. (CKPC) joint venture, and the Ruby natural gas pipeline.

Pembina in its quarterly earnings report ascribed the delays and impairments to COVID-19, changing commodity price dynamics, and evolving political priorities. The company said that it believes a “time for these projects may come,” but can no longer predict with certainty when that time will be.

Pembina recorded a fourth-quarter 2020 loss of $1.2 billion and a loss for the full year of $316 million compared with earnings of $150 million and $1.5 billion, respectively, in the same periods in the prior year.

The US Federal Energy Regulatory Commission (FERC) in March 2020 approved Jordan Cove and the associated 229-mile Pacific Connector gas pipeline. A series of lawsuits followed, with a US Appeals Court later in the year denying a request that FERC approval be vacated pending resolution of the legal actions (OGJ Online, Oct. 12, 2020).

Jordan Cove would be the first US west coast LNG plant and would have advantaged access to Asian markets.

CKPC includes a proposed 550,000-tpy integrated propane dehydrogenation and polypropylene complex in Sturgeon County, Alta. Pembina in March 2020 deferred capital expenditures on the complex and in December suspended the project indefinitely.

Ruby is a 680-mile, 42-in. OD natural gas pipeline that entered service in 2011, designed to transport as much as 1.5 bcfd from Opal hub in Wyoming to Malin hub in Oregon.

In August 2020, Moody’s downgraded Ruby Pipeline LLC due to increasing 2021 re-contracting risk in a weak natural gas pricing and volume environment. Moody’s said at the time that “if Ruby executes firm transportation contracts from the larger producers in the Rocky Mountains, it would likely be at reduced rates as Canadian natural gas remains competitive.” Fitch Rating described Ruby’s utilization as roughly 50% in October 2018. Ruby is jointly owned by Pembina and Kinder Morgan Inc.