The latest Canadian company facing a regulatory delay in moving forward with a liquefied natural gas export project is Calgary-based Veresen Inc., proponent of Jordan Cove LNG on the Port of Coos Bay in Oregon.
On Monday, the company confirmed that unexpected delays in an environmental review being conducted by the U.S. Federal Energy Regulatory Commission have pushed its final investment decision from the end of this year to mid-2016. The $7-billion project is to have capacity to ship six million tonnes per year of supercooled gas sourced in both Canada and the U.S.
Veresen shares tumbled as much as eight per cent or $1.40 to $15.45 on Monday morning.
“We continue to see strong buyer interest in the Jordan Cove LNG project based on its locational advantage, competitive cost structure and access to both western Canadian and Rockies gas supply basins,” said chief executive Don Althoff in a news release.
“Veresen is taking advantage of the revised FERC schedule by continuing to optimize project costs and schedule, and value engineering opportunities, as well as leveraging the lower oil price environment and slowdown in global energy projects.”
A spokesman did not immediately respond to a request for further comment.
Veresen said FERC had moved the date for issuing its final environmental impact statement to Sept. 30, suggesting a final FERC certificate will be issued on or before Dec. 29 and a “Notice to Proceed” by mid-2016. A final investment decision is to follow.
Jordan Cove is negotiating tolling agreements with buyers rather than enlisting customers as investors, the model being pursued by Malaysia’s Petronas Bhd. and Royal Dutch Shell Plc. on Canada’s West Coast. Veresen said it expects negotiations now underway with potential customers could be extended about six months longer than expected to year-end 2015 or into early 2016.
The delays were expected in light of the previously announced FERC schedule, said RBC Dominion Securities analyst Robert Kwan.
“While the disclosure on the delays for Jordan Cove is not entirely surprising, we believe that the incremental uncertainty could modestly weigh on the share price,” he wrote in a note to investors on Monday morning.
Veresen said previously it had spent about $150 million over three years on its quest for a FERC permit. It has secured a licence to export LNG to U.S. non-free trade agreement countries.
The company also announced Monday its midstream partnership’s Saturn natural gas compressor station in northeastern B.C. was placed in service in early June, ahead of schedule and significantly under budget at $155 million.
It said David Fitzpatrick has been appointed president and CEO of Veresen Midstream.
dhealing@calgaryherald.com
Twitter.com/HealingSlowly