FERC Chairman Joseph Kelliher said the agency will continue processing the applications for two rival liquefied natural gas (LNG) terminal projects in Maine despite growing opposition by Canadian officials to LNG tankers traversing their waters.

"Because neither Quoddy Bay nor Downeast LNG have amended or withdrawn their applications, the FERC staff is continuing the process of preparing an environmental impact statement (EIS) for each project," Kelliher wrote in a March 2 letter to Canadian Ambassador to the U.S. Michael H. Wilson, who had voiced his country's strong objections to the twin projects.

Quoddy Bay LLC is seeking FERC approval to build a 2 Bcf 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. A rival project, Downeast LNG, would be located in Robbinston, ME, which is about 60 miles north along the coast. Both would have to travel through Canadian waters to reach their terminal sites.

Kelliher's letter was in response to Wilson's letter last month in which he said Canada would not permit large LNG tankers to enter Passamaquoddy Bay off the coast of southwestern New Brunswick due to the environmental and navigational risks (see Daily GPI, Feb. 16). Wilson said Canada was willing to work with the United States to meet its energy needs, but he issued a legal threat.

The Canadian government "will not permit LNG tankers to pass through Head Harbour Passage," considered a dangerous stretch of the Passamaquoddy Bay, which straddles the U.S.-Canadian border, Wilson wrote. "We are therefore prepared to use domestic legal means to address our concerns and prevent such passage from occurring."

Kelliher was more conciliatory in his letter. He called on Wilson to supply FERC with a copy of study that the Canadian government commissioned on the environmental impacts and safety concerns of the LNG projects. "I understand this study is nonpublic and has not been shared with the Commission," the FERC chairman wrote.

He asked for greater assistance from the Canadian agencies. "I ask that you [Wilson] request the appropriate Canadian environmental, coastal and navigational safety agencies to assist FERC staff and the U.S. Coast Guard as they continue their analysis of these projects. To date, our requests for information have not been answered beyond an Aug. 1, 2006 commitment from Foreign Affairs and International Trade Canada to provide a response, which we have not received," Kelliher said.

He noted that the U.S. Department of State currently is working with the Federal Energy Regulatory Commission staff and the Coast Guard to resolve the concerns of the Canadians about the LNG projects.

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