Landlocked natural gas producers look to potential West Coast export terminal for hope
Natural gas producers in Wyoming had already been battling tough market conditions well before the coronavirus outbreak started paralyzing the world’s energy economy.
Wyoming boasts 16 of the country’s biggest natural gas fields. But other plays in the Permian Basin, as well as the Marcellus and Utica shale formations in the Northeast, have made competition tight for Wyoming producers. On top of that, wicked-low natural gas prices have been driving Wyoming’s top producers to cut back on production.
For years, Wyoming operators have held out hope for accessing international demand for natural gas. Last month, natural gas producers throughout the Rockies scored a small win when the Federal Energy Regulatory Commission, or FERC, gave the green light to the Jordan Cove liquefied natural gas export terminal in Coos Bay, Oregon, along with a corresponding 229-mile pipeline. Landlocked Wyoming could see high returns if the export terminal on the west coast comes to fruition, because it would offer access to markets in Asia, proponents say.
Even still, the export terminal has had its fair share of controversy and been in the works for over a decade. For one, it’s hit several roadblocks over the years, particularly from the state’s regulatory bodies. Oregon’s Department of Environmental Quality blocked necessary water quality certificates last year. The project’s owner, Canadian energy company Pembina Pipeline Corp., still needs to obtain an extension for a dredging permit with the Department of State Land, too. In the latest hiccup, Oregon Department of Land Conservation and Development objected to the project, though the energy company is working on an appeal.
“As a result of this objection, neither FERC nor (the Army Corps of Engineers) can grant a license or permit for this project unless the U.S. Secretary of Commerce overrides this objection on appeal,” the Department of Land Conservation and Development stated in its objection to the project.
The proposed facility has also faced significant protest from several environmental groups for well over a decade. Constructing and operating the facility would damage coastal ecosystems, crucial waterways and the climate, opponents say.
Given the steep regulaDespite the recent federal commission’s stamp of approval, Randall Luthi, chief energy advisor for Gov. Mark Gordon, still considers the export terminal a “glimmer on the far horizon.”
Though supportive of making additional markets and export capacity available for Wyoming’s energy sectors, Luthi said it will likely take years before the export terminal is complete and the benefits trickle over to Wyoming.
Liquefied natural gas export facilities operate in Georgia, Louisiana, Maryland and Texas, shipping the commodity to over three dozen countries. The U.S. is one of the world’s leading exporters of liquefied natural gas. Export of the commodity increased by nearly 4,000 percent between 2015 and 2018. The Energy Information Administration predicts LNG exports from the U.S. will only continue to grow in coming years, and producers throughout the Rockies want in.
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Tough times
Yet persistently low prices for natural gas coupled with a global oil price war during the coronavirus outbreak have made the LNG export terminal a bit of a distant dream, some analysts said. As the pandemic seizes the global economy and depressed prices persist, “natural gas companies are just trying to survive,” Luthi, the governor’s energy advisor, noted.
Higher tax burdens, steep supply costs and delays in federal land permitting have deterred some companies from putting down roots in Wyoming, according to Paul Ulrich, vice president of government and regulatory affairs at Jonah Energy, a leading natural gas producer operating in Wyoming’s Green River Basin. The region produces about two-thirds of the state’s natural gas.
A weak natural gas market combined with these challenges have had a chilling effect on investment in the industry, too. In light of market pressures, Ultra Petroleum Corp., one of the largest energy producers and taxpayers in Wyoming, announced in September it would cease drilling on the Pinedale Anticline.
Yet, proponents of the Jordan Cove export terminal have vowed to keep fighting for access to international markets.
Rep. Chuck Gray, R-Casper, called the Jordan Cove export terminal “absolutely pivotal” to Wyoming. He has also long been an advocate of a coal export terminal in Washington that has hit similar roadblocks. He has called West Coast states’ decisions to block Wyoming’s access to international markets a violation of interstate commerce.
Efforts to build the coal export terminal in Washington also hit a snag last month when a state court upheld a decision by state regulators there to block permits needed to construct it. The ruling put a damper on Wyoming lawmakers’ hope to export more Powder River Basin coal to other countries during a time when domestic demand for the commodity wanes. If constructed along the Columbia River, the Millennium Bulk Terminal would be able to receive about 16 trainloads of Powder River Basin coal to ship to customers in Asia each day.
Higher tax burdens, steep supply costs and delays in federal land permitting have deterred some companies from putting down roots in Wyoming, according to Paul Ulrich, vice president of government and regulatory affairs at Jonah Energy, a leading natural gas producer operating in Wyoming’s Green River Basin. The region produces about two-thirds of the state’s natural gas.
A weak natural gas market combined with these challenges have had a chilling effect on investment in the industry, too. In light of market pressures, Ultra Petroleum Corp., one of the largest energy producers and taxpayers in Wyoming, announced in September it would cease drilling on the Pinedale Anticline.
Yet, proponents of the Jordan Cove export terminal have vowed to keep fighting for access to international markets.
Rep. Chuck Gray, R-Casper, called the Jordan Cove export terminal “absolutely pivotal” to Wyoming. He has also long been an advocate of a coal export terminal in Washington that has hit similar roadblocks. He has called West Coast states’ decisions to block Wyoming’s access to international markets a violation of interstate commerce.
Efforts to build the coal export terminal in Washington also hit a snag last month when a state court upheld a decision by state regulators there to block permits needed to construct it. The ruling put a damper on Wyoming lawmakers’ hope to export more Powder River Basin coal to other countries during a time when domestic demand for the commodity wanes. If constructed along the Columbia River, the Millennium Bulk Terminal would be able to receive about 16 trainloads of Powder River Basin coal to ship to customers in Asia each day.
As for the LNG export terminal, if completed, it could be a boon to the Rocky Mountain region’s energy sector, said Howard Cooper, president of Three Crown Petroleum.
“It will create more jobs in Wyoming, generate more tax revenue for Wyoming and the U.S. will be exporting clean fuel to Asia,” Cooper said. “At the same time, it will create jobs in Oregon. Why should Oregon prevent Wyoming from accessing the Asian market with its natural gas, while Georgia, Texas and Louisiana did not prevent states in the Midwest and East from exporting their natural gas internationally?”
