Calais LNG looks for new financial backer

Posted July 21, 2010, at 11:01 p.m.

AUGUSTA, Maine — A company hoping to build a liquefied natural gas terminal in Calais is working to line up a new financial backer after the original partner opted to drop out of the project.

If a new backer is not found within three weeks, Calais LNG will withdraw its application from the Board of Environmental Protection, according to a letter sent Wednesday to state regulators.

Calais LNG wrote to BEP chairwoman Sue Lessard that GS Power Holdings LLC — a subsidiary of the global investment firm Goldman Sachs Group Inc. — “is in the process of selling its interest in the project to a new financial partner.”

No reason is given for GS Power Holdings’ decision.

“In the event that the transaction noted above does not close by August 11, 2010, Calais LNG would expect to withdraw all Calais LNG applications filed with the Maine Board of Environmental Protection,” attorney David Van Slyke wrote to Lessard.

Calais LNG has proposed to build a liquefied natural gas facility on a 330-acre site along the St. Croix River and Passamaquoddy Bay. The project is estimated to cost $800 million to $1 billion.

The latest development comes one week after BEP officials reluctantly agreed to the company’s request to postpone a week of public hearings that had been scheduled to begin this past Monday.

At the time, Van Slyke had said Calais LNG needed more time to complete a number of tests, surveys and data collection for its proposed development before the hearings.

Calais LNG official Art Gelber declined to comment on the letter Wednesday evening until Lessard had been given a chance to make a decision on the company’s request to postpone a legal meeting scheduled for Friday.

But critics of the project seized on the letter and suggested that Calais LNG’s financial situation may have been the real reason for postponing this week’s public hearings.

Ronald Shems, an attorney for Save Passamaquoddy Bay 3-Nation Alliance, also noted that Calais LNG has been touting Goldman Sachs’ involvement as proof of the project’s strength.

“The fact that Goldman Sachs is pulling out speaks volumes to the project’s merit,” Shems said.

It was unclear Wednesday evening whether Goldman Sachs will have any additional involvement in the project other than through GS Power Holdings LLC. Calais LNG’s website highlights in several places the role that Goldman Sachs is playing in the project.

“In the Calais LNG project, Goldman Sachs sees an opportunity to invest in a project that will supply much-needed, cost-effective, cleaner natural gas to areas including Maine, New Hampshire, and Boston where there is growing demand for natural gas and a shortage of supply,” the site states.

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