FERC Friday denied the Canadian province of New Brunswick's request to suspend processing of the applications to build the Quoddy Bay and Downeast liquefied natural gas (LNG) terminals in Maine and associated pipeline projects.

The government of New Brunswick in February asked the Federal Energy Regulatory Commission to take this action, citing the Canadian government's decision to deny LNG tankers permission to cross Canadian waters, in particular Head Harbour Passage, in order to reach Quoddy Bay's and Downeast's proposed import terminals along Maine's coast (see Daily GPI, Feb. 16). Head Harbour is a dangerous stretch of Passamaquoddy Bay, which straddles the U.S.-Canadian border.

New Brunswick's request came on the heels of Canadian Ambassador Michael Wilson's protest of the terminal projects. In a letter to FERC in mid-February, he said allowing LNG tankers to enter Passamaquoddy Bay off the coast of southwestern New Brunswick was an environmental risk that Canada was not willing to accept. He further said Canada would resort to "domestic legal means" to block LNG tankers from crossing Canadian waters on their way to the Quoddy Bay and Downeast LNG terminals (see Daily GPI, Feb. 16).

In the meantime, the Department of State has entered the dispute, asserting U.S. rights under international law and defending "innocent passage" of U.S.-bound LNG tankers through Head Harbour Passage (see Daily GPI, April 9).

While FERC "recognizes that such issues of international law are beyond its purview," it "does not agree with New Brunswick...that the Commission should exercise its discretion to suspend these proceedings on the Quoddy Bay LNG applications because issues relating to LNG tanker passage through Canadian waters have not yet been resolved," the order said [CP07-35]. FERC repeated the statement in a separate order addressing the Downeast LNG project [CP07-52].

"There is a vital need for additional imported LNG supplies to meet increased demands for natural gas from all consuming sectors. Therefore, the Commission will continue its review of the proposed Quoddy Bay LNG project and preparation of an environmental impact statement so that the project can proceed in a timely manner if issues relating to LNG tanker passage through Canadian waters are favorably resolved and the Commission finds, after thoroughly reviewing all environmental and safety...matters, that approval of the project is in the public interest," it noted. The agency echoed these comments in its order on the proposed Downeast LNG terminal.

Quoddy Bay LNG 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. The Quoddy Bay project also would include a 42-mile pipeline lateral to the Maritimes & Northeast Pipeline system.

The rival Downeast LNG project, to be located in Robbinston, ME, would consist of a single storage tank (160,000 cubic meters), processing equipment (500 MMcf/d of peak sendout), a new pier and several small support buildings. Site acreage is adequate for the installation of a second storage tank if the demand for gas outpaces current projections.

Once built, the facility would receive one ship a week on average, carrying about 125,000 to 138,000 cubic meters of LNG, or about 2.6-2.8 Bcf of gas. Ship transit from Head Harbor Passage to the pier would take less than two hours.

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