Feds reject permit for Calais LNG, but developers say project isn’t dead yet

By Tom Walsh, BDN Staff
Posted April 06, 2012, at 9:53 a.m.

CALAIS, Maine — The Federal Energy Regulatory Commission has pulled the plug on a six-year effort to build a liquefied natural gas terminal on the St. Croix River basin in Passamaquoddy Bay near the Washington County community of Calais.

Jeff Wright, FERC’s director of energy projects, has notified the Calais LNG Project Company and the Calais LNG Pipeline Company that the project is no longer being considered for federal permitting, citing loss of financing, loss of access to a proposed project site and withdrawal of state permitting.

The project was envisioned as an $800 million to $1 billion terminal to be located at a 330-acre site south of Calais at Red Beach. That site included 2,800 feet of shoreline along the deep-water banks of the St. Croix River and Passamaquoddy Bay.

Critics of the project claim the FERC action is the death knell for bringing an LNG terminal to Down East Maine. The project’s development manager doesn’t agree.

“This kills the proposed Calais LNG project,” said Robert Godfrey, an environment activist with the Save Passamaquoddy Bay organization. “Calais LNG is only the second LNG terminal applicant to ever be dismissed by FERC. The first dismissed LNG project was Quoddy Bay LNG, proposed at Pleasant Point.”

Ian Emery, Calais LNG project’s development manager, on Thursday termed FERC’s action “disappointing” but insists that it “in no way means the end of the Calais LNG project.”

“For the past 5 plus years, I’ve seen my share of ups and downs while working on this project,” Emery said in a prepared statement sent Thursday to the Bangor Daily News. “Together with our project team we have overcome many challenges that come from developing such a significant energy project like Calais LNG.

“When you are building a facility that has the potential to provide heat to over 2.5 million homes daily and/or provides cheap, clean affordable natural gas for electricity to nearly 5 million homes daily, you are going to shake up the energy markets and with that attract more challenges beyond just obtaining environmental permits. With FERC’s latest decision, it only hardens our resolve to get this project built for the people of Calais, Washington County and Maine.”

Emery said his efforts to secure partnerships and financing were undermined by the economic downturn that began eroding the U.S. economy in 2006. He said he is now working to rekindle business relationships associated with LNG supply contracts and investment agreements.

“We hope to have both funding and supply secured by the end of the summer based on negotiations underway with investors and LNG suppliers,” he said in the statement released this week. “Currently, Calais LNG is in negotiations with Atlantic Basin LNG suppliers as well as investors to fund the balance of regulatory work and the purchase of land associated with the project. I have always maintained that as long as the City of Calais continues to support this project, I would do all that I can to see that project gets built.”

Emery claims Calais LNG has invested over $25 million on environmental, engineering, and legal groundwork for the project, including $20 million spent in Maine. He notes that Calais LNG has successfully received approvals from the U.S. Coast Guard to allow the largest LNG ships to call on the proposed port in Calais and that the City of Calais has approved zone change and local permits.

Godfrey contends that the emergence of new domestic sources of natural gas renders importation of LNG unnecessary.

“In 2005 there were nearly 40 LNG import terminal projects in the works; Now, there are just two,” he said. “Both are unneeded due to the vast supply of domestic natural gas in nearby Pennsylvania and due to rapidly expanding natural gas interstate pipelines in the Northeast and New England regions. The natural gas industry itself has already recognized and dismissed LNG import terminal projects as a worthless and defunct business model.”

http://bangordailynews.com/2012/04/06/news/down-east/feds-reject-permit-for-calais-lng-but-developers-say-project-isnt-dead-yet/ printed on September 20, 2014