An Oregon state agency on Monday delivered a major setback to the Jordan Cove liquefied natural gas terminal project, just days after the company behind the project said it was pushing back its target startup by up to a year, to 2025.

The Oregon Department of Environmental Quality said in a news release that it had denied Jordan Cove's application for a Section 401 Water Quality Certification, which is required for the U.S. Army Corps of Engineers to issue permits for the project. However, it said the project can reapply for the certification and submit more information that could result in a different decision.

Pembina Pipeline Corp., the Canadian company that owns the project proposed to be built at Coos Bay, Ore., had said in its quarterly earnings news release just last week that it is suspending spending on non-permitting-related activities related to the project this year, to let state and federal regulatory processes catch up with other work it has been doing. It said it expects to resume the suspended work next year, subject to the regulatory approvals occurring.

As a result, construction of the project if it is approved and goes forward now is expected to conclude in 2025, being delayed up to a year from the previous target date, the company says.

Jordan Cove is being proposed as a way for gas produced in Canada and the U.S. Rockies to be exported to Asian markets. It has support from backers of gas drilling in western Colorado's Piceance Basin who hope to see it provide a stable, long-term outlet for locally produced gas. The project requires numerous approvals, including critical ones from the state of Oregon and the Federal Energy Regulatory Commission.

FERC has denied the project before due to concerns about a lack of definitive customers overseas for a project that would require condemnation of some properties on the route of a proposed pipeline in Oregon to reach the terminal.

Pembina has been working to reach more right-of-way agreements with landowners on the pipeline route and says it has executed nonbinding agreements with LNG customers in excess of the project's planned design capacity.

It said in its news release last week that discussions with prospective customers are continuing with the goal of concluding binding agreements by early next year.

Project critics question its financial viability and are concerned about landowner and environmental impacts. Pembina said in its news release that it continues to consider the project to be viable but has decided to limit capital investment on non-permitting-related activities until it makes a final decision on whether to go forward with it.

The Oregon Department of Environmental Quality said in its news release that there is insufficient information to demonstrate compliance with water quality standards by Jordan Cove, and available information shows some standards are more likely than not to be violated. It specifically cited concerns about expected effects of construction and operation of the pipeline and associated road and work areas on water temperature and sediment in streams and wetlands, and also possible impacts to the Coos Bay estuary.

The department says it asked for more information from Jordan Cove three times, and the project provided some but not all the information requested.

"This (decision) is a huge victory for clean water and healthy ecosystems in Oregon, and it will help protect our climate from dangerous fossil fuel projects," Jared Margolis, a senior attorney at the Center for Biological Diversity, said in a news release.

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