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Maine's Downeast LNG Continues; Quoddy Bay Falters

Responding to FERC's forewarning that the pipeline portion of its Downeast LNG project could be in jeopardy, the company has informed the agency that it will hold a 30-day open season for capacity on the line beginning Monday (Nov. 3). At the same time another coastal Maine project, Quoddy Bay LNG LLC told state regulators it was withdrawing its request for state permits following FERC's dismissal of its import terminal application.

Last month at the same time the Commission gave the Downeast Pipeline LLC an opening to remedy its deficiency, it dismissed Quoddy Bay's application because it had failed to provide requested information (see NGI, Oct. 27).

The Federal Energy Regulatory Commission indicated that the proposed pipeline to serve Downeast LNG LLC's liquefied natural gas (LNG) terminal project in Maine faced an uncertain future because of its failure to conduct an open season. The Commission staff said it would discontinue review of the pipeline project unless Downeast Pipeline submitted a schedule for conducting an open season within 20 days or explained why it believed an open season was not necessary at this time [CP07-53].

"Considering the uncertainty of the outcome of the environmental analysis, the fact that you have not attempted to garner the critical project information that you would obtain through holding an open season, and the passage of nearly two years since the filing of the application, we must reassess whether Commission staff's continued efforts and analysis are appropriate under these circumstances," wrote J. Mark Robinson, director of the FERC's Office of Energy Projects, in a letter to Downeast Pipeline [CP07-53].

If FERC halted its review of the pipeline project, this could have put the entire Downeast LNG terminal project in peril. Downeast Pipeline said it would submit to the Commission the results of its open season within 30 days.

Downeast Pipeline earlier this year submitted to FERC a revised route for its pipeline facilities that would serve the LNG terminal proposed for Robbinston, ME, which would have a peak sendout capacity of about 500 MMcf/d (see NGI, Jan. 28). The revised proposal includes a 29.8-mile, 30-inch diameter pipeline that would completely avoid crossing the Moosehorn National Wildlife Refuge. The facilities would extend from the proposed Downeast LNG terminal to the Maritimes & Northeast pipeline at the existing Baileyville Compressor Station in Baileyville, ME.

The proposed Maine terminals have faced their share of problems over the years. Besides local criticism, both Downeast LNG and rival Quoddy Bay LNG -- a proposed 2 Bcf/d LNG import terminal on a Native American reservation at Split Rock, ME -- also ran into opposition from Canada, which objected to tankers using its waters to transport LNG to the Maine terminals.

FERC recently dismissed Quoddy Bay's terminal application, citing the failure of the company to provide requested information. As a result, Quoddy Bay LNG told Maine regulators in late October it was withdrawing its request for state permits to build the project, but expects to refile them in the future.

In a letter to Maine's Board of Environmental Protection, Quoddy Bay LNG President Donald Smith blamed its problems on the "global energy and economic markets and trends of the past month" and the uncertainty surrounding "the world LNG supply and demand situation."

In addition, Smith said the company was having difficulty with part of the project's proposed facilities. "We still have not been able to firm up the likely Btu content of our LNG and thus have not been able to firm up whether we will have to build the nitrogen mitigation facility," Smith wrote in his letter to regulators.

Quoddy Bay LNG's proposal included a 35.8-mile gas pipeline from the LNG terminal to the interstate gas pipeline in the Town of Princeton, ME.

The Commission's dismissal is without prejudice to Quoddy Bay, meaning that the LNG developer could refile once it is able to finalize its design and provide a complete new application, which would entail a new proceeding. The existing Quoddy LNG application had been pending at FERC since December 2006.

One other Maine LNG import facility proposal is still on record. Calais LNG hopes to build a terminal in Calais, ME, with a capacity of 1 Bcf/d

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