In a letter to Quoddy Bay LNG LLC, the Department of State said it would continue to assert U.S. rights under international law and defend "innocent passage" of U.S.-bound liquefied natural gas (LNG) tankers through Head Harbour Passage, a dangerous stretch of Passamaquoddy Bay, which straddles the U.S.-Canadian border.

"We have repeatedly told Canadian officials that your [LNG terminal] project is subject to ongoing Federal Energy Regulatory Commission review and that your permit request should be allowed to go forward and conclude normally, without any prejudgment, outside political or other extraneous interference," wrote Paul E. Simons, deputy assistant secretary for energy, sanctions and commodities at the State Department, in a recent letter to Quoddy Bay President Donald M. Smith.

"My deputate, the Bureau of Western Hemisphere Affairs, and our Embassy in Ottawa and Consulate in Halifax have been very engaged both on the legal aspects of the transit issues, and on the issues of transparency and fairness that are also raised in this dispute," he said. "The department as a whole has raised the issue multiple times with Canada since last summer."

Canadian Ambassador to the U.S. Michael H. Wilson's February letter to FERC, in which he threatened legal action to block Quoddy Bay's tankers from traversing Head Harbour Passage, "was inconsistent with our long history of collegiality and close cooperation on transborder energy issues," Simons said (see Daily GPI, Feb. 16). "We have called on the Canadian government to release the study [on the environmental impacts and safety risks of LNG projects that] Ambassador Wilson cited in his letter, and we have been told that it will be released in April."

Quoddy Bay 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. The LNG would have to travel through Canadian waters to reach Quoddy Bay's terminal site.

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