In Greek mythology, Sisyphus was a king who was punished for his self-aggrandizing craftiness and deceitfulness by being forced to roll an immense boulder up a hill, only to watch it come back to hit him, repeating this action for eternity.
The Jordan Cove Project is a proposal by Calgary-based energy company Veresen to build a liquefied natural gas (LNG) export terminal within the International Port of Coos Bay, Oregon. The natural gas would be transported to the terminal by the Pacific Connector Gas Pipeline. In other words, it’s a Canadian project to sell Canadian natural gas.
Last March, the Federal Energy Regulatory Commission (FERC) denied an application by Pacific Connector to construct and operate the 232-mile pipeline, which would have completed the supply chain of natural gas from the Piceance Basin in western Colorado, to Jordan Cove in Coos Bay, Oregon. With the denial of the pipeline project, the FERC also denied the related application by Jordan Cove LNG to construct and operate the proposed $5.3 billion gas export facility known as the Jordan Cove Project.
Following the FERC’s shocking denial (the FERC has rarely met a pipeline project they didn’t love), a ragtag group of Colorado politicians and industry backers orchestrated a PR blitz to revive the dead project in a blatant effort to con investors into dumping more money into natural gas futures contracts. Classic market manipulation.
With Senator Bennet, Governor Hickenlooper and Dave Ludlam from the West Slope Colorado Oil & Gas Association (WSCOGA) leading the charge, fracking fanatics supported Veresen’s request for a rehearing last April.
In a surprising development, Veresen even conjured up “contractual agreements” with JERA Co, ITOCHU Corp., and Macquarie Energy LLC that would allegedly cover up to 77 percent of Jordan Cove’s capacity and more than 50 percent of the pipeline capacity. The announcement was surprising because, in more than ten years of planning, and in the application to the FERC, Veresen had never provided a list of prospective LNG customers. In fact the FERC said in its ruling that it denied the projects because Pacific Connector “presented little or no evidence of need” for its project. The FERC cited the pipeline project’s lack of agreements or expressions of interest from customers wanting to ship gas from the pipeline.
But then magically Veresen came up with the “evidence” — circumstantial as it is.
In May, the FERC recognized Veresen’s request for a rehearing but postponed any further decision on the matter.
Fast forward to the present. This week a posse of three headed off on a junket to Coos Bay to urge the FERC to reconsider the Jordan Cove Project. The fact that the FERC actually meets in Washington, DC, did not seem to sway Mesa County Commissioner Rose Pugliese, Rio Blanco County Commissioner Shawn Bolton, and Bonnie Peterson, executive director of the Associated Governments of Northwest Colorado, from their mission to keep pushing that boulder up the hill.
Of course the Daily Sentinel made front page news out of it in last Friday’s edition.
And local TV station KKCO joined in the fray with this 3-minute news segment featuring local expert Bob Arrington.
According to Arrington the reporter edited out most of what he said. “I spent about an hour talking with Kalie Greenberg of KKCO. She wanted to know why I opposed the Jordan Cove pipeline. I explained how Australia got ripped off on their domestic gas prices so their gas could be sold at 18 times home profit and, of course, increased profits in Australia. It is the same situation here: sell what you can to foreign markets and make a huge profit, cut domestic supply and increase profits at home, taking back some of what you put in the local economy. But the supply being exploited is tight sands and shale, which is unlike the pools, or fields, of the past that had straight line decline for constant production. Shale gas fields have asymptotic decline, meaning very rapid decline after initial surge, and a higher cost to get to production. I explained the “red queen” effect* where they have to keep drilling to keep a level of production.
[*Based on the Red Queen’s advice from “Through the Looking-Glass”: “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”]
“I showed Greenberg a chart of how production falls with drilling slowdown. I outlined that the drawing-in of investors on a system like this is an actual Ponzi scheme where the last investors in will take it in the shorts when drilling stops or companies change. An investment in a pipeline that would take 30 years to payoff could mean that in 30 years there could be no gas to put in the pipeline. In 30 years that gas may become a nonexistent fuel. I also explained continued growth economies have never been borne out with mining or extraction industries. They are always boom then bust as finite resources are exhausted. It was better to build renewable industries and stable industries such as agriculture, tourism, and hunting.”
In case you’re wondering, when the “leaders” tour the site this is what they’ll see.On Wednesday, the Daily Sentinel reported that JERA (one of three possible LNG customers) submitted a letter to the FERC in support of the Jordan Cove Project and urged commissioners to “promptly grant rehearing and issue the requested authorizations in the referenced dockets to allow the project to move forward.”
Click here to read the letter from Yuji Kakimi, president of JERA Co., Inc.
Wim DeVriend is a local expert with Citizens Against LNG on the Oregon end of this pipeline dream. He had this to say about the letter from JERA: “Sounds as if it was written by Jordan Cove’s lawyers — in fact, I would bet on it. Other than that, I don’t see anything new. The Japanese are well-known for encouraging alternative suppliers. It’s a proven commercial tactic to keep prices down. One local example of that tactic is the port’s resurrected railroad, which enables the few mills that use it to keep pressure on truckers’ rates.”
Notice that the letter and the news article were both posted on the same day, and during the same week the West Slope trio arrived in Coos Bay. As if that isn’t enough proof this junket is one big publicity stunt, the Daily Sentinel article reads like an advertisement for the Colorado gas industry.
… “This is an exciting opportunity for Oregon and Colorado,” Mesa County Commissioner Rose Pugliese wrote on her Facebook page during a tour of the Jordan Cove site.
Jera’s letter is a “huge development,” said John Swartout, who heads up rural and energy-related issues for Colorado Gov. John Hickenlooper. Typically, Japanese companies are “very respectful” of other nations’ processes, Swartout said, but Jera seems eager to move forward “given all that’s happened to them with their energy portfolio” …
… Completion of the Jordan Cove project would make “Colorado and Oregon more prosperous and Japan more safe,” said David Ludlam, executive director of the West Slope Colorado Oil and Gas Association.
“While the uncommon letter is from Jera, the communication more broadly speaks on behalf of 125 million Japanese people who trust Colorado more than Iran when it comes to their families and future,” Ludlam said …
If we’re to believe the hype from these industry promoters the economy and safety of the entire world depends on West Slope gas. That boulder just keeps getting bigger ‘n’ bigger. So big, in fact, that it has morphed into a meandering gas tanker.
Unfortunately for the Jordan Cove fracking fanatics, also this week Bloomberg exposed the futility of the proposed project with this report on the global gas glut, rock-bottom prices, and “homeless LNG.”
A liquefied natural gas tanker plying the waters of the Mediterranean has created a guessing game for energy traders.
The Maran Gas Delphi has taken a meandering course after loading up on U.S. shale gas a month ago at Cheniere Energy Inc.’s Sabine Pass export terminal in Louisiana. The ship anchored off the coast of Greece for several days, prompting speculation that it would deliver its supplies to a port in the region. Instead, the tanker is now off the coast of Egypt approaching the Red Sea, raising the prospect that it may instead travel to the Middle East or Southeast.
The winding track of the Maran Gas Delphi is a testament to how a gas glut fed by surging production from countries including the U.S. and Australia is complicating global trade of the fuel. The rise of so-called homeless LNG, or supplies not already committed to customers, is confounding efforts by traders and analysts to get a grasp of the market and make bets.
“It’s a bit of a mystery,” Jason Feer, head of business intelligence at ship broker Poten & Partners in Houston, said of the Maran Gas Delphi. “Normally LNG logistics are pretty well-rehearsed, and having an LNG carrier cooling its heels is expensive.”
Cargoes of LNG not committed to customers will peak at 80 million tons by 2020, up from 50 million now, Feer said. This comes as buyers demand more flexible terms and long-term contracts expire amid the global market oversupply, he said
The Maran Gas Delphi is not the only example of how LNG cargoes are taking a longer or diverted route to find a home. The Stena Clear Sky, also with a cargo from Sabine Pass, spent a month circling South America before unloading on Mexico’s Pacific coast, instead of taking a shorter route via the now-opened Panama Canal, which would have saved it about 21 days.
More complicated routes highlight how flexible LNG trade is becoming, with more demand for short-term trade to place cargoes in an oversupplied market, said Malcolm Johnson, a Guildford, England-based faculty member of The Oxford Princeton Programme, an energy training provider.
U.S. volumes are flexible and don’t have destination restrictions and charter rates are low, which means the buyer wins time to find the best market, he said. A tanker that’s carrying an LNG cargo can effectively be used as storage …
Well, that certainly does shoot their whole “market demand” argument all to hell.
In The Myth of Sisyphus, a 1942 essay by Albert Camus, Sisyphus is presented as the symbol of humankind, and his eternal uphill struggle with the boulder exemplifies the absurdity of life and the futility of existence.
During this current bust cycle we’ve all witnessed how, in spite of the glutted market and low prices, the gas industry and its fanatics never stop pushing the boulder uphill.
No matter what happens, whether the FERC holds on its denial of the Jordan Cove Project or caves under pressure, all of this amounts to an exercise in futility.