Calais LNG withdraws application to build $1 billion natural gas terminal

By Kevin Miller, BDN Staff
Posted Dec. 14, 2010, at 8:10 p.m.

AUGUSTA, Maine — After months of delays and financial setbacks, officials at Calais LNG notified state regulators on Monday that they are withdrawing their application for a $1 billion liquefied natural gas project in Down East Maine.

Company officials indicated, however, that they are not giving up on the project and hope to refile a viable permit application with the Board of Environmental Protection “in the near term.”

“It is our firm belief that, but for the extreme turbulence of the capital markets, Maine would be well on its way toward having an LNG facility in Washington County that would be capable of providing stable and secure natural gas prices for Maine’s industrial, commercial and residential consumers,” Ian Emery of Calais LNG wrote to BEP chairwoman Sue Lessard.

During the past six months, Calais LNG has requested numerous extensions from the BEP as it worked to line up a new financial backer after a subsidiary of the global investment firm Goldman Sachs withdrew from the project.

Then in mid-November, the owners of the land on which a large part of the project was to be built notified the board that Calais LNG had lost the option to purchase or lease the land.

The company requested a fifth time extension — this time until Jan. 15. But in a draft order to be considered by the full board Thursday, Lessard recommended that the application be returned to Calais LNG.

“The record shows, and there is no dispute, that after nearly a year, Calais LNG’s applications are not ready for processing for reasons that are unrelated to the board or its application review process,” Lessard wrote. “In fact, the applications are less ready for processing now than when the first time extension was granted in July 2010, Calais LNG having lost title, right or interest and financial capacity in the interim.”

Emery did not go into specifics about the company’s financial situation or how Calais LNG planned to regain right or title to land. But Emery wrote that “various energy companies” have shown an interest in the project.

And with the strong backing of local residents and businesses for an LNG terminal in Calais, “we are very optimistic that we will be able to satisfy the requirements necessary for permitting in the near future, at which time Calais LNG fully intends to re-file its applications.”

The company’s proposal for an import terminal and pipelines in the Red Beach area of Calais had garnered strong support from the city, local and state business groups as well as many area residents.

Calais City Manager Diane Barnes said Tuesday evening she was disappointed to learn the company had been forced to withdraw its application but chalked it up to another sign of the tough economic times. Barnes estimated tax revenues from the plant would have paid 85 percent of the city’s tax base while creating good-paying jobs.

“We’ve come so far and the community really supported it,” Barnes said. “The community really wanted this type of development … and the jobs that would come with it.”

But Barnes added she is optimistic that, within several months, the company will be able to refile.

The proposal’s critics were not surprised by the news.

Bob Godfrey with the organization Save Passamaquoddy Bay said the bay is “intrinsically inappropriate” for LNG development.

“And Calais LNG began its project around eight years too late to beat others to the finish line,” Godfrey said in a statement. “The US is now in a 100-year natural gas glut, eliminating the need for additional LNG import facilities. Passamaquoddy Bay and its residents are now a large step closer to protection from harmful LNG siting.”

The third of three companies that have eyed the Calais area for a terminal, Calais LNG has proposed building an $800 million to $1 billion facility on a 330-acre site located south of the city at Red Beach. The site features 2,800 feet of shoreline along the deep-water banks of the St. Croix River and Passamaquoddy Bay.

But as in previous LNG proposals for the area, Canadian officials had objected to the passage of LNG tankers in what they consider to be Canadian internal waters en route to Calais. Canadian officials said the tankers posed safety and environmental risks.

Supporters of the Maine projects, meanwhile, had accused Canadian officials of trying to block LNG in Maine in order to protect the financial interests of its own energy industry.

Calais LNG’s withdrawal means there are currently no liquefied natural gas applications pending with the board. A second company, Downeast LNG, has said it also plans to refile an application with the board.

http://bangordailynews.com/2010/12/14/business/calais-lng-withdraws-application-to-build-1-billion-natural-gas-terminal/ printed on September 20, 2014