• Natural Gas News

    Pembina Pipeline Takes Impairment on Jordan Cove

Summary

Ultimate fate of Oregon LNG project still uncertain

by: Dale Lunan

Posted in:

Complimentary, Natural Gas & LNG News, Americas, Liquefied Natural Gas (LNG), Petrochemicals, Corporate, Financials, News By Country, Canada, United States

Pembina Pipeline Takes Impairment on Jordan Cove

Pembina Pipeline, the Canadian midstream operator proposing the 7.8mn mt/yr Jordan Cove LNG export terminal, has taken a C$349 (US$277)mn impairment on the project, it said February 25 while releasing its Q4 2020 financial results.

The impairment includes all previously-capitalized amounts related to Jordan Cove, except for land with a recoverable carrying amount of $21mn.

Jordan Cove LNG, which Pembina acquired in 2017 when it bought midstreamer Veresen, has been beset by landowner opposition and difficulties acquiring key Oregon state permits. 

Pembina also took a Q4 impairment of C$1.4bn on its investment in Ruby Pipelines, an interstate pipeline extending from Opal, Wyoming to Malin, Oregon, and considered a critical link in Jordan Cove accessing gas from the Western Canadian Sedimentary Basin and the Rockies basin in the US.

“The impairment was the result of upcoming contract expirations and prevailing interruptible tariff rates, along with Rockies basin fundamentals, and the ongoing uncertainty with respect to Jordan Cove, which would ultimately be expected to utilise capacity on the Ruby Pipeline,” Pembina said.

The Jordan Cove and Ruby Pipeline impairments come in the wake of Pembina’s decision in December 2020 to pause work on its C$4bn integrated propane dehydration and polypropylene (PDH/PP) facility near Edmonton. That decision prompted Pembina to take a third impairment – C$323mn – in Q4.

Taken together and including “other” adjustments of C$24mn, Pembina’s fourth quarter impairments totaled C$2.09bn, and were a major component in the C$1.2bn net loss the company reported for the three-month period. Without the impairments and associated deferred tax recoveries, Q4 earnings would have been C$338mn.

“We believe the time for these projects may come; however, we can sadly no longer predict with certainty when that time will be and hence were compelled to reflect their impairments in our 2020 financial statements through a non-cash charge,” Pembina said.