Proposed import terminal for natural gas in Washington County advances

Posted Feb. 12, 2014, at 4:48 p.m.
Last modified Feb. 12, 2014, at 6:32 p.m.
Eric Zelz

Downeast LNG has cleared a federal regulatory hurdle in its quest for approval to develop a liquefied natural gas import terminal in Robbinston, its president said Wednesday, but the proposed project still faces questions and obstacles.

The company also has acquired the site of its proposed facility, buying the land for $2.5 million.

The latest regulatory approval could set up a vote by the Federal Energy Regulatory Commission on the project by spring or summer, Dean Girdis, Downeast LNG president, said Wednesday.

The proposal still faces obstacles, however. And FERC is waiting for answers to new questions it has posed to Downeast LNG.

The proposed facility would consist of two storage tanks, a re-gasification plant, a pier to receive LNG carriers, and a natural gas pipeline to connect the facility to the existing Maritimes and Northeast Pipeline that runs from Nova Scotia, Canada, through Maine.

Safety modeling related to safeguards at the facility to protect against a spill or fire have just recently been approved by the federal Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, clearing the way for completion of an environmental impact statement for the project, Girdis said Wednesday. The project has been delayed since 2009 because of issues related to safety modeling of storage tanks, he said.

Next, FERC would issue a scheduling order that specifies when the environmental impact study would be released, he said. Girdis expects the environmental impact statement to be released in April. The commission would vote on the project within two to four months afterward, he said.

FERC officials could not be reached for comment on Wednesday.

However, a leading critic of the project said Wednesday that the federal agency has asked Downeast LNG new, “difficult” questions.

FERC has asked Downeast LNG to justify its import project now that domestic natural gas production is booming, said Robert Godfrey of Eastport, a spokesman and researcher for Save Passamaquoddy Bay. The federal agency also is requiring Downeast LNG to answer how the company plans to ship natural gas south to its intended Boston market on the Maritimes and Northeast Pipeline, he said.

Spectra Energy, the company that owns and operates the pipeline, announced recently it is planning to reverse direction, expanding its pipeline systems in order to carry natural gas from areas of abundant supply in New York and Pennsylvania to markets in New England and the Maritime provinces. Downeast LNG must respond to the questions by Feb. 27, said Godfrey.

There is no need for an import facility because of dramatic shifts in energy production and markets, Godfrey said. “Essentially, the U.S. is pumping out a sea of natural gas,” he said, and companies are seeking to export it. “We’re swimming and drowning in natural gas,” added Godfrey.

When Downeast LNG first applied for a permit, “everyone was madly chasing” imported LNG. There were 40 such projects pending in 2005, according to Godfrey. The application by Downeast LNG is the last remaining land-based project being proposed, he said. By contrast, now there are 20-some applications to export LNG from the U.S., he said. “The U.S. has more natural gas than it knows what to do with,” said Godfrey.

“He makes an interesting point,” Girdis said in response. “At present that’s true in most of the United States.” However, in New England and the Maritime provinces, natural gas is still not getting to consumers in adequate supply, and prices have skyrocketed. “Unless something changes in the situation … we’re going to see high winter prices in New England for some time to come.”

Despite the recent announcement by Spectra Energy to expand its pipeline capacity in order to bring natural gas to the Northeast and Canada, neither Spectra nor any other company has applied to FERC or other regulatory agencies with specific proposals, said Girdis.

Godfrey reviewed a litany of other objections and potential hurdles to the project. Among them, Downeast LNG is unlikely to be able to obtain a state permit for the pier it needs, he said, and Canadian officials have made clear they will not allow LNG tankers through Head Harbour Passage, between Deer Island and Campobello Island, into Passamaquoddy Bay.

But Downeast LNG continues to push its proposal through the permitting process and last summer purchased the Robbinston site for its LNG terminal for $2.5 million. The seller was Thomas McLaughlin of Phoenix, Ariz., according to real estate transfer tax documents.

The company was interested in obtaining another option for several years, but the owner was in his 80s and was uncomfortable about the uncertainty of the project, said Girdis.

“It’s an extraordinary piece of property,” added Godfrey, consisting of 30 acres of forested land and 50 acres that is inter-tidal. More than a half-mile of the property fronts U.S. 1, and more than a half-mile is shoreline, he said. Besides boasting unusual rock formations, portions of the property are considered sacred by the Passamaquoddy Tribe, according to Godfrey.

“We would have been happy to have found a conservation purpose for it,” said Godfrey.

Girdis was guardedly optimistic about the company’s prospects at this stage of the regulatory process. “I’m hopeful. See where it goes. Can’t read the future.”

 

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