The Canadian province of New Brunswick has filed motions with FERC to suspend its review of the competing Quoddy Bay LNG and Downeast LNG projects because of the Canadian government's decision to deny LNG vessels permission to cross Canadian waters, in particular Head Harbour Passage, in order to reach the proposed import terminals along Maine's coast (see Daily GPI, Feb. 16).

"As a result of this vessel ban, the LNG receiving terminal and related facilities proposed by Quoddy Bay LNG LLC and Quoddy Bay Pipeline...cannot receive LNG vessels and hence are not viable," the province told FERC.

LNG vessels visiting the terminals would have to cross Head Harbour Passage between Campobello Island and the New Brunswick mainland, which is strictly under Canadian jurisdiction. On Feb. 14, Canadian Ambassador to the U.S. Michael Wilson sent a letter to FERC Chairman Joseph Kelliher stating that Canada had decided to deny permits to LNG vessels transiting the area because of environmental and navigational risks.

The Quoddy Bay LNG project developers subsequently told the U.S. State Department that such a move by Canada would violate international law. "It appears that the Ambassador has overlooked international law when describing the position of the Canadian government. We are confident that the State Department's attorneys agree with our legal interpretation that an attempt to prevent LNG vessels from using Head Harbour Passage violates international laws and agreements," said Quoddy Bay LNG Project Manager Brian Smith. "It appears that the Canadian government is attempting to circumvent due process and the FERC review in order to prevent the fair treatment of our project."

New Brunswick told FERC this week that in light of Canada's objections to the projects and the costs associated with an 18-month regulatory review it would be prudent for FERC to suspend the process. "There simply is no need at this time for the Commission and the parties to expend resources through the lengthy and complex [National Environmental Policy Act] process given that the Quoddy Bay terminal cannot become operational due to the Canadian government's prohibition on LNG vessel transit through Head Harbour Passage," New Brunswick said in its motion regarding Quoddy Bay LNG.

The province also noted that FERC recently asked Sound Energy Solutions (SES) to show cause why the Commission should continue its review of its LNG project in Long Beach, CA, in light of Long Beach Harbor's decision not to issue a site lease for the project. New Brunswick said transit through Head Harbour Passage is "just as essential" to the two Maine projects as a site lease is to the SES LNG project.

Quoddy Bay LLC filed an application with FERC in December to build its 2 Bcf/d LNG import terminal on a Native American reservation at Split Rock, ME, and a storage project in Perry, ME. The 15-acre site abuts the Passamaquoddy and Cobscook bays. The Quoddy Bay project also would include a 42-mile pipeline lateral to the Maritimes & Northeast Pipeline system. The rival Downeast LNG project would be located in Robbinston, ME, which is about 60 miles to the north along the coast (see Daily GPI, March 13, 2006). Downeast filed an application with FERC for its LNG and pipeline project on Dec. 22, 2006.

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