More than four years after it originally proposed construction of a deepwater liquefied natural gas (LNG) terminal to be sited on a man-made island off the coasts of New York and New Jersey, Atlantic Sea Island Group LLC (ASIG) has shelved the project, citing the recent retirement of ASIG founder and CEO Howard Bovers and current economic conditions.

The Safe Harbor Energy LNG terminal proposed for the 60.5-acre island would have the capacity to deliver 2 Bcf/d to 65 million consumers, lessening the region's heavy dependence on natural gas shipped from the Gulf Coast. The project would be located 23 miles from New York Harbor and 19 miles from New Jersey (see NGI, Jan. 30, 2006).

In a letter dated June 29 that was sent to the U.S. Coast Guard (USCG) and the Maritime Administration (MARAD), ASIG partners J. Gordon Arbuckle and Phillip A. Bangert wrote that the decision to stop the application process was based on both Bovers' retirement and current economic considerations. Bovers announced last month that he was retiring due to a prolonged illness.

"This announcement, when weighed with existing market conditions, the current climate regarding offshore development in the aftermath of the recent Gulf incident and the prevailing uncertainty with respect to both the U.S. and global economy has led the board of directors to a careful determination that it is prudent, given this collective uncertainty, that the project and its attendant license application be temporarily suspended," according to the partners' letter. The decision "by no means...[suggests] ASIG's intent to terminate the Safe Harbor Energy project," according to the partners, who said ASIG has access to the financial and technical resources needed to advance the project and intends to reactivate the application process "upon resolution of the issues" that prompted its shelving.

"We...emphasize ASIG's intent to resubmit the license as soon as circumstances allow," they wrote.

In addition to the hurdles cited in the partners' letter, ASIG's LNG plans had faced legal and regulatory hurdles since their 2006 unveiling (see NGI, Jan. 5, 2009).

ASIG's withdrawal of its application leaves TransCanada Corp. and Royal Dutch Shell plc's Broadwater project as the only proposed LNG project in the region. Broadwater, which would include a floating LNG storage and vaporization vessel and a 25-mile pipeline project, would be built on the north side of Long Island in Long Island Sound about nine miles from the closest New York shoreline and 11 miles from the closest Connecticut shoreline.

Safe Harbor Energy and Broadwater were both designed to serve New York City regional markets. Broadwater would be connected to the Iroquois Gas Transmission System, while Safe Harbor LNG presumably would be connected to Transcontinental Gas Pipe Line (see NGI, March 24, 2008). New York has repeatedly asked the Federal Energy Regulatory Commission to withdraw or vacate its order approval of the $700 million Broadwater project (see NGI, May 11, 2009).

Meanwhile, LNG capacity available to the northeast U.S. has increased in recent years. The Canaport LNG terminal at Mispec Point, near Saint John, NB, marked its official opening last September (see NGI, Sept. 28, 2009). Canaport, which was the first land-based LNG receiving and regasification terminal built on the East Coast of North America in more than 30 years and the first LNG receiving and regasification terminal in Canada, can supply up to 20% of New York and New England's gas demand, according to managing general partner Repsol YPF. Repsol said it plans to quadruple its global volumes of LNG sold by 2012.

Also, two deepwater LNG ports have been installed off the coast of Massachusetts in recent years, adding to the deliveries from the nearly 40-year old Distrigas of Massachusetts onshore LNG terminal in Everett, MA. Distrigas is now owned by GDF Suez Energy NA, which expects to receive first deliveries in August at its newly-constructed Neptune LNG deepwater port offshore Gloucester, MA (see NGI, May 31). Excelerate Energy LP's Northeast Gateway Deepwater Port in Massachusetts Bay has been operating since 2008 (see NGI, March 29).

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