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Congressman Scott Tipton

Representing the 3rd District of Colorado

Geopolitical Case for Jordan Cove

September 12, 2018
In The News

Federal administration and elected officials in Grand Junction Tuesday touted not just the job benefits but the geopolitical case for liquefied natural gas export projects like Jordan Cove in Oregon, while an official for that project said space in it is being set aside for gas production from the Rockies.

Jordan Cove project supporters U.S. Sen. Cory Gardner and U.S. Rep. Scott Tipton, both Colorado Republicans, met at Colorado Mesa University in a roundtable discussion on the project that included Francis "Frank" Fannon, assistant secretary of the State Department for energy resources, and Joe Balash, assistant secretary of the Interior Department for land and minerals management. Also participating were local Jordan Cove boosters including county commissioners from Mesa, Garfield and Rio Blanco counties, and a county commissioner from Coos County, Oregon, where the Jordan Cove project would be built.

"This project is amazing. …. Colorado gas has the opportunity to really fuel the world," Fannon said.

Balash said energy provides freedom to move and grow.

"That is something that we can export to our friends and allies," he said.

Gardner said Taiwan is closing down its nuclear power production and will need to find energy to replace it.

"We have an opportunity to provide geopolitical security to a great ally like Taiwan and to have those jobs being created here," he said.

He said Russia seeks to control and manipulate other countries that depend on its energy exports, and if the United States provides allies with energy to power their economies and save their sovereignty, "that's a pretty powerful tool."

Said Fannon, "Russians use their gas for power, they use their oil for money."

He said Lithuania was able to counter that power by developing an LNG import facility that forced Russia's Gazprom gas supplier to lower its prices.

Fannon said of Jordan Cove, "This project and this kind of work, I can't overstate the importance of the contribution to global energy security."

Stuart Taylor, senior vice president for marketing and new ventures for Jordan Cove LNG, which is part of Canada-based Pembina, said it was a "huge achievement" for Jordan Cove when the Federal Energy Regulatory Commission recently laid out a schedule under which it expects to decide on the project in late 2019. That would allow Jordan Cove to stick to its planned schedule for beginning to ship gas in 2024, when the global demand for LNG is expected to begin exceeding supply, he said.

"We've had great success. There will continue to be regulatory challenges. We need all the support we can get at the state level, at the federal level, in order to keep progressing," he said.

Said Tipton, "Somebody will supply the (LNG) product. Why not us, why not here?"

He said gas can be supplied in an environmental fashion by Colorado producers.

"Nobody will do it better, nobody will do it more responsibly than we will right here," he said.

Jordan Cove is being touted by backers of Western Slope natural gas production as a likely new and long-term outlet for locally produced gas, although it also is expected to get gas from other sources as well, including Canada.

On Tuesday, Taylor said Jordan Cove plans to specifically hold space in the project for Rockies producers.

That space currently may amount to about 75 million to 150 million cubic feet a day, which Taylor acknowledged doesn't sound like a lot in the context of a project that could initially ship 1.3 billion cubic feet a day. But he explained that what's being envisioned is an opportunity within that reserved space for Rockies producers to specifically receive Asian prices for gas, which even after the costs of liquefying and shipping the gas would mean a considerably higher profit margin compared to selling gas on the open market.

"We're excited to work with the Colorado producers," Taylor said.

As for the initial Rockies gas volume envisioned under such an arrangement, "We'd like to start there and see where we go," he said.

Meanwhile, Jordan Cove more generally should help support western United States gas prices by providing a major new outlet for gas, and Taylor said it also could help replace what's expected to be a shrinking California market.

Diane Schwenke, president and chief executive officer of the Grand Junction Area Chamber of Commerce, said one of the things that most excites her about Jordan Cove is the potential for it to provide 20-year contracts for gas producers, providing stability for not just those companies but the many small businesses they support. Businesses want consistency and a level playing field for future investment, she said.

"From our standpoint that is huge," she said.

Mesa County Commissioner Rose Pugliese said stabilization of the energy industry also helps allow for diversifying the economy, such as by investing in infrastructure that benefits things such as tourism and recreation.

"It opens us up to a lot more opportunities," she said.

Quint Shear, a board member and past president of the West Slope Colorado Oil and Gas Association, said the industry has the production capacity and has made the investments that could help meet the needs of a project like Jordan Cove. He noted the benefits that industry provides to small manufacturers, machine shops, welders and other companies that provide services to it.

Coos County Commissioner John Sweet said the project would be vital for his county, which has struggled for decades with the slowdown in the logging industry, and would benefit from the high-paying jobs and big boost to the property tax base. He said the county currently is struggling badly enough financially it has a hard time keeping its jail open.

While timber and lumber products are still a big part of the economy, "We need another leg to our economic stool and this will help provide that," he said.

Sweet's visit to Colorado this week was to include a stop at a local drilling rig site Tuesday as he works to learn more about natural gas production. While he strongly favors the Jordan Cove project, he said a vocal minority opposes it, in part due to the lack of oil and gas drilling in Oregon and the fears about its impacts that can result.

"I think it's important to be able to respond to the concerns and allegations," he said in explaining his desire to learn more about the industry himself.

Balash used Tuesday's event to tout efforts by the Trump administration to reduce regulatory and bureaucratic hurdles to oil and gas development, such as by imposing deadlines and even page-count limits when it comes to environmental reviews and the documents associated with them.

"We're starting to see some real results there," he said.

Taylor said regulatory certainty is important to Jordan Cove as well.

"I can't tell you enough the cloud of doubt that hangs over this project, and it hurts from a competition perspective. Our competitors use the doubt against us," he said.

He said the market wonders as well, with LNG buyers prone to look elsewhere if they worry about Jordan Cove's prospects in the regulatory process.

And Pembina's own board also looks for certainty about the potential for success for the Jordan Cove project, which is currently costing some $10 million a month in permitting and other expenses.

Meanwhile, observers from Balash to Gardner worry about what Colorado voters might decide on this fall's ballot, which includes a measure that would require 2,500-foot setbacks between drilling and homes and vulnerable areas such as streams, lakes, parks and open space. The industry and its supporters say the measure could largely shut down drilling in Colorado.

Balash said he thinks there needs to be more consideration about the "moral argument why our energy is important."

"I think that's an element to the conversation that may be missing around here," he said.

Gardner said if energy production is stopped, "The same people who are worried about Russians taking over are going to take away one of the most powerful tools we have in diplomacy to counter Russia."