The tale of Jordan Cove provides lessons in government regulation – and patience

Had regulators pushed ahead with approving the southern Oregon pipeline, the costs could have been high

December 28, 2021 6:30 am

The long effort to create a natural gas pipeline to Jordan Cove in southern Oregon is over. (Oregon Department of Energy/Jordan Cove Energy Project)

Snap decisions, so often prized, are not always the best. Sometimes the inefficiencies of government and regulation can lead to the right result.

Consider the recently defunct – after half a year of suspended animation, and a dozen years of regulatory limbo – the Jordan Cove Energy Project.

Go back a generation or slightly more and you’ll encounter a lot of discussion about the energy crisis in the Northwest, how our accelerating use of energy is outstripping our production of it. News stories were full of plans for development of nuclear plants (with attendant financial catastrophe) and coal-fired production operations.

A new federal agency, the Northwest Power Planning Council, was set up (based in Portland) to develop strategies for coping with the power gap and developing more.

Times change.

There’s a good case now for scrapping the council (now called the Northwest Power and Conservation Council and which, okay, just got a new member from Oregon, long-time legislator Ginny Burdick). And the region is floating along quite well with existing power sources.

We don’t need to do, in other words, what we once thought we needed to.

In 2007 two Canadian groups, Jordan Cove Energy Project and the Pacific Connector Gas Pipeline, started regulatory applications to import natural gas, which was then in short supply, from Asia. (The controlling partner most recently has been the firm Pembina.) The plan was to ship compressed gas across the Pacific Ocean to a terminal at Coos Bay, and then send it by pipeline to points east. Natural gas prices then were high enough that the business model appeared to work.

The region would get new jobs, much appreciated in Coos Bay. The downsides were partly environmental and partly the result of running the pipeline through private as well as public lands. Property owners were hit with the prospect of eminent domain proceedings seizing land and houses.

All of that might have happened if regulation had been super-efficient. It was not.

Initial federal approval did come in 2009, and the wheels started to turn, but opposition grew and proceedings dragged on. During that time, natural gas production in the United States picked up, and prices fell.

The market changed so much that not only did the original business model no longer work, but the backers of the project in 2013 asked for permission not to import but rather export natural gas. The energy needs of Americans were no longer a driving consideration, and fewer jobs probably would have been created.

The project refused to die until the wheels came off this year.

After the Federal Energy Regulatory Commission gave its permission to go ahead, subject to Oregon state approval, Oregon turned thumbs down. Last month, when FERC asked whether the company still planned to pursue the pipeline, the Jordan Cove consortium threw in the towel and said it would withdraw its application.

Jordan Cove has advocates. Scott Lauermann of the American Petroleum Institute said the withdrawal was “yet another unfortunate example of a much-needed U.S. energy infrastructure project being terminated due to unnecessary regulatory delays.”

A commonplace line of argument these days – and yet. Imagine that, back in 2007, the project had been hurriedly approved. What would have been the end result?

We wouldn’t have any more natural gas, not in the United States, since by the time construction was done the market would have forced export of the product (the direction Pembina turned toward anyway).

But we would have had more environmental damage and, a number of people (including Representative Peter DeFazio) said, it would have been one of the biggest carbon emitters in Oregon, putting more pressure on everyone else to meet carbon goals.

Others have pointed out additional environmental problems: “Dozens of animals and plants listed under the Endangered Species Act are threatened by this proposal, including iconic coho salmon. The pipeline would have to cross steep mountainous terrain that poses excessive landslide risks, while the terminal is proposed in an area at-risk of severe earthquake and tsunami damage.”

Property owners in and near the planned pipeline routes haven’t easily been able to sell or improve their property. Close to a third of homeowners in the planned pipeline area refused entreaties to sell, a strong protest. Today, those owners are in better shape.

Sometimes when we move too fast we can jump too far ahead of our needs, and be bitten by the solutions we adopt.

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Randy Stapilus

Randy Stapilus has researched and written about Northwest politics and issues since 1976 for a long list of newspapers and other publications. A former newspaper reporter and editor, and more recently an author and book publisher, he lives in Carlton.