The Quoddy Tides

Eastport, Maine

2010 Dec 24

Calais LNG withdraws state application
but plans to refile

by Edward French

Calais LNG withdrew its applications with the state Board of Environmental Protection (BEP) two days before the company's latest request for an extension of time was to be considered by the BEP. The company's letter asking for the applications to be withdrawn was sent four days after the BEP chair recommended that the applications by Calais LNG be returned, if they were not first withdrawn. Calais LNG has indicated that it plans to refile the applications at a later date.

The project was scheduled for a BEP public hearing in July but has been on hold at the request of Calais LNG since just before the hearing was set to begin. In her recommendation, the BEP chair, Susan Lessard, wrote, "Since that time, Calais LNG has lost title, right or interest in a significant portion of the property proposed for development and has failed to resolve financing issues such that its applications are now devoid of any demonstration of financial capacity. Additionally, the applicant has not addressed the technical issues which were the basis for the first time extension request in July."

Lessard stated, "The board finds that demonstration of sufficient title, right or interest is a threshold criterion which must be met prior to acceptance of an application for process and that title, right or interest must be maintained throughout the processing of an application." Not only had the option agreement between Calais LNG and Steven Carothers and Gail Roberts lapsed, but the BEP found that the option on a 70-acre parcel owned by David Brown, which is also proposed for the Calais LNG terminal, expired on September 30, with no evidence of renewal. The two parcels make up the proposed site for the LNG terminal south of Devil's Head in Red Beach.

Concerning financial capacity, the recommendation notes that since GS Power Holdings "no longer holds any interest in the proposed project, the applications now lack the financial capacity information on which the finding that the applications were complete for processing was based." Although Calais LNG Project Manager Ian Emery had informed the board that North East Energy Development LLC, of which he and Calais LNG partner Arthur Gelber are the principals, had acquired all of the interest of GS Power Holdings in the Calais LNG project, the recommendation notes that North East Energy Development "is not a new partner in this project" and the statement about the purchase "does not provide even a minimal demonstration of financial capacity to support processing of the applications."

The recommendation states, "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. 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."

Lessard's recommendation notes that Calais LNG "is free to refile applications at any time when it is ready to address the issues of incompleteness."

Calais LNG has blamed the downturn in the financial markets as the reason for having to withdraw its applications. In a December 14 letter to the BEP chair and the acting commissioner of the Department of Environmental Protection, Beth Nagusky, Ian Emery wrote, "While we believe that it is in Calais LNG's best interest, as well as in the best interest of the State of Maine, for the companies to withdraw their applications at this time, it is worth noting that this is being done now as a result of a significant force majeure that has impacted all of America — the meltdown of the financial markets. 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."

Emery added that, based on "the strong support of the community and other interested groups, the interest in this project currently being shown by various energy companies, and the general continued forward momentum of the project, 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."

With the withdrawal, the Calais LNG request for an extension of time, until January 15, to secure a new financial partner and resecure title, right or interest to the land was not considered at the BEP meeting on December 16.

Downeast LNG update

While the state review process has currently ended for one LNG project, the federal review of the Downeast LNG project in Robbinston is continuing. A December project update issued by the Federal Energy Regulatory Commission notes that the commission is continuing its review of the draft Environmental Impact Statement (EIS) for the project. The update states that FERC has been delayed in issuing a final EIS partly because of recent issuances by the U.S. Department of Transportation on the federal safety standards for LNG facilities. "Downeast LNG has been consulting with the U.S. Department of Transportation, and on November 17, 2010, we asked Downeast to provide additional information in regard to these issuances," the update states.


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