In a decision that could move a proposal for a liquefied natural gas (LNG) import terminal on the St. Croix River in Calais, ME, one step closer to FERC approval, the U.S. Coast Guard has found the Passamaquoddy Bay Waterway suitable for LNG marine traffic.

In response to a letter of intent (LOI) submitted by Calais LNG Project Co. LLC, the Coast Guard considered the suitability of Head Harbor Passage, Western Passage, Passamaquoddy Bay, the St. Croix River and the approaches to the Bay of Fundy from the Atlantic Ocean and Grand Manan Channel from the Gulf of Maine, as well as a waterway suitability assessment (WSA) previously submitted by Calais.

"The review focused on the navigation safety and maritime security aspects of LNG vessel transits along the affected waterway," Coast Guard Capt. James B. McPherson of the Northern New England Sector said in a Sept. 21 letter of recommendation (LOR) to the Federal Energy Regulatory Commission (FERC). "My analysis included an assessment of the risks posed by these transits and possible risk mitigation measures that could be imposed by FERC's...order, if one is issued."

The Coast Guard's finding of suitability assumes full implementation of recommended strategies and risk mitigation measures identified in the WSA and LOR. In the absence of those strategies and measures, the Passamaquoddy Bay Waterway "would be considered unsuitable for the proposed LNG marine traffic," McPherson said.

Calais LNG and Calais Pipeline Co. LLC last year filed an application at FERC to build an LNG import terminal and an associated pipeline (see Daily GPI, Jan. 8). The proposed Calais LNG terminal would have three storage tanks and the capacity to deliver 1 Bcf/d of revaporized LNG to the 20-mile, 36-inch diameter Calais Pipeline, which would interconnect with Maritimes & Northeast Pipeline in Princeton, ME. In January Calais LNG filed a series of permit applications with the Maine Department of Environmental Protection and the state's Department of Conservation, Bureau of Parks and Lands.

In July Calais LNG said a key financial backer, GS Power Holdings LLC, had pulled out of the approximately $1 billion project. Last week the Maine Board of Environmental Protection agreed to a Calais LNG request to put its permit request on hold until Dec. 1 to give the company time to line up financing and gather information required by state regulators.

The Coast Guard finding was released more than 20 months after McPherson told FERC the same waterway was suitable for tankers to deliver LNG to Downeast LNG Inc.'s proposed regas terminal in Robbinston, ME. (see Daily GPI, Jan 12, 2009). FERC has since issued a positive draft environmental review of Downeast LNG Inc.'s proposal (see Daily GPI, May 19, 2009).

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