The Quoddy Tides

Eastport, Maine

2010 August 13

BEP grants another extension of time
for Calais LNG project

by Edward French

Calais LNG has been allowed another extension of time by the Maine Board of Environmental Protection (BEP) in the postponed hearings on the company's applications for state permits. On August 12 BEP Chair Susan Lessard granted Calais LNG's request for the latest extension. The company made the request on August 9 because it has not yet secured new financing for the project, following the decision by financial backer Goldman Sachs to pull out of the project.

The proposed $1 billion project south of Devil's Head in Red Beach has been on a high-stakes roller coaster the past few weeks. On July 13 the company requested a last-minute postponement of the BEP hearings that it had been pushing for months to be placed on a fast track. That request was granted by the BEP. A week later, on July 21, the company announced that its financial backer, GS Power Holdings, a subsidiary of Goldman Sachs, was selling its interest, after investing $24 million in the project. Calais LNG anticipated that the sale would occur by August 11, but if it didn't, then the company would expect to withdraw all of its applications filed with the BEP.

Then on August 9 Calais LNG attorney David Van Slyke wrote to the BEP chair requesting an extension of time, beyond August 11, before deciding whether to withdraw the company's applications for state permits. "Calais LNG and GS Power Holdings LLC are actively engaged in negotiations with potential financial partners," he wrote. "Despite these efforts, however, negotiations have not progressed as far as Calais LNG had hoped, and additional time beyond the August 11, 2010, deadline is necessary. Calais LNG therefore requests an extension until September 11, 2010, so that the negotiation process can move forward and the project can secure new financing."

In her decision, Lessard wrote, "I am sensitive to the difficulties a further delay in this proceeding creates for the other parties. Because the application has been put on hold, at some point the information in the applications may become outdated and withdrawal may be appropriate. However, given the nature and complexity of the proposed project and the fact that the burden of proof is on the applicant for compliance, the current request to keep the application on hold for a limited time is granted." A conference with attorneys for the company and the intervenors in the hearings is scheduled for September 8 to determine how the BEP will proceed.

The request for the extension of time was opposed by some of the intervenors, including the Roosevelt Campobello International Park Commission, the Conservation Law Foundation and Save Passamaquoddy Bay-US. Ron Beckwith, the new superintendent of the park commission, wrote that the commission "believes that Calais LNG was not and is not ready to support its applications before the board and does not have the funding to carry out the project for which it seeks approval." He noted that this is the third time that Calais LNG has attempted a last-minute extension of a deadline. "First, Calais LNG requested and was granted a postponement of the board's Calais LNG hearing in order that Calais LNG, in Roosevelt Campobello's interpretation, rectify omissions in its applications that should have been available earlier. Then Calais LNG requested and was granted a postponement of a board conference, because Calais LNG was trying to secure financial backing. Calais LNG stated that if it did not have this backing by August 11 that it would withdraw its applications before the board.... Now, Calais LNG seeks another last-minute extension because its financial backing is not yet secured." He added that Calais LNG does not currently have the financial capacity required by the state's Site Location of Development Law.

However, Lessard noted in her decision that "the financial capacity standard in the Site Location of Development Law ... is not a threshold requirement that must be met for processing of an application. Rather, it is a licensing criterion for which evidence is supplied during the licensing process, and in fact a permit may be granted with a condition that a final demonstration of financial capacity be made prior to construction."

Calais LNG partner says project not struggling

Calais LNG partners could not be reached to comment on the latest developments. However, soon after the announcement was made on July 21 that its financial backer would be selling its interest, Calais LNG Development Manager Ian Emery released a statement, saying that during the five years he has been involved with the project he has seen his share of ups and downs that come with developing "perhaps one of the most complicated and heavily regulated projects in natural gas industry." When the initial project effort fell short several years ago, Emery says he and "natural gas industry veterans assembled a new team to continue the development to permit and eventually build the Calais LNG terminal." He added, "I've watched my children go from cradles to kindergarten during this project. It's the incredible support from the citizens in Calais and many around this great state that keeps me and the rest of our team going and motivated to see this project to a successful conclusion."

Emery continued, "Some may see our project struggling, but I see it as another opportunity to fix what needs to be fixed and improve upon all the great work our team has done in an effort to bring new jobs and economic opportunity to Maine."

"So far the project has seen great success with nearly $24 million dollars invested to complete environmental studies and permit applications for all local, state and federal permits. With the recent unanimous vote of approval for our local permits by the City of Calais, we believe Calais LNG is well positioned to receive state and federal approvals to begin construction as early as next year. We do have to pull some additional information together for our state application and finalize some agreements with certain agencies, and this will require time. As with all projects we are coming to the end of a budget cycle, and with that decisions and changes have been made to ensure the project will continue to move through the permitting stages, we hope without significant delays. We, Calais LNG, are eager to start the next phase of the project, which is construction estimated to create nearly 1,000 new jobs in Washington County as early as next year."


© 2010 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.