Federal regulators said Friday that Fort Chicago Energy Partners LP's (FCE.UN.T) proposed liquefied natural gas terminal in the Pacific Northwest could be built without significant environmental losses, paving the way for possible approval.

In a final environmental impact statement, the Federal Energy Regulatory Commission said the Jordan Cove LNG import terminal proposed near the Oregon coast, plus a 234-mile natural gas pipeline that would ship imported gas from the terminal to nearby interstate pipelines, could be built in a way that minimizes the potential threat of earthquakes, accidents and a terrorist attack, as well as potential harm to soil, wetlands and water resources.

The LNG terminal is being developed by Fort Chicago and Energy Projects Development LLC. The related pipeline, called Pacific Connector, is being developed by units of Williams Cos. (WMB), PG&E Corp. (PCG) and Fort Chicago.

FERC worked with other federal and state agencies to complete the environmental review, including the U.S. Coast Guard, National Marine Fisheries Service, Fish and Wildlife Service and Bureau of Land Management.

In September, FERC approved NorthernStar Natural Gas Inc.'s $700 million Bradwood Landing LNG terminal, which is also in Oregon, and which the state's governor opposes. A 2008 Oregon Department of Energy report concluded that LNG isn't needed in Oregon, would be more costly than domestically produced natural gas and would have substantial environmental ramifications.

FERC is also considering a third Oregon LNG project in Warrenton being developed by Leucadia National Corp. (LUK) and former executives of Calpine Corp. (CPN) who purchased the rights to the project from Calpine.

Neither Bradwood Landing nor Oregon LNG would serve the southern Oregon, northern California and northern Nevada gas markets, as the Jordan Cove LNG project would, FERC concluded.

NorthernStar, based in Houston, is backed by private equity fund Matlin Patterson. The company is developing a second LNG terminal off the coast of California, called Clearwater Port.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com