A "meltdown of the financial markets" has forced Calais LNG to withdraw its application to build a $1 billion liquefied natural gas (LNG) terminal, import facility and pipeline project in Calais, ME, but the company intends to reapply at a later date, according to a letter sent to the Maine Board of Environmental Protection (MBEP) Tuesday.

"It is our firm belief that, but for the extreme turbulence of the capital markets, Maine would be well on its way toward having an LNG facility in Washington County that would be capable of providing stable and secure natural gas prices for Maine's industrial, commercial and residential consumers," Calais LNG Development Manager Harold Ian Emery said in the letter.

The MBEP had been scheduled to vote Thursday on a motion to end Calais LNG's application (see Daily GPI, Dec. 15) and the Federal Energy Regulatory Commission (FERC) last week indicated that it might cease processing the proposal (see Daily GPI, Dec. 7), but in the end economic conditions brought the current permitting effort to an end.

"While we believe that it is in Calais LNG's best interest, as well as in the best interest of the state of Maine, for the companies to withdraw their applications at this time, it is worth noting that this is being done now as a result of a significant force majeure event that has impacted all of America -- the meltdown of the financial markets," Emery said.

The project had received necessary permits for the project from the city of Calais, had recently received a favorable Waterway Suitability Report from the U.S. Coast Guard, and had the support of several organizations, including the Maine State Chamber of Commerce, Emery said.

"Based upon all of those positive results, the strong support of the community and other interest groups, the interest in this project currently being shown by various energy companies, and the general continued forward momentum of the project, we are very optimistic that we will be able to satisfy the requirements necessary for permitting in the near future, at which time Calais LNG fully intends to refile its applications."

Calais LNG announced in July that a key financial backer, GS Power Holdings LLC, had pulled out of the project (see Daily GPI, Sept. 24) and had trouble acquiring some of the land needed to site the project, according to MBEP.

In its application, Calais LNG had proposed to site an import terminal on the St. Croix River in Calais, ME. The 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.

The withdrawal of the Calais LNG application is the latest in a series of recent setbacks for LNG projects in the United States. NorthernStar Natural Gas Corp. threw in the towel on its proposed $800 million, 1 Bcf Bradwood Landing LNG receiving terminal in Oregon in May, citing extended permitting delays and a "difficult investment environment" as the primary causes (see Daily GPI, May 6). Atlantic Sea Island Group LLC also cited current economic conditions -- along with the retirement of its founder and CEO -- when it shelved its proposal for a deepwater LNG terminal to be sited on a man-made island off the coasts of New York and New Jersey (see Daily GPI, July 29).

Plans for the MapleLNG terminal, which was to be built east of Halifax, NS, were scrapped in August (see Daily GPI, Aug. 26) and ExxonMobil Corp.'s proposal for a $1 billion floating LNG project offshore New Jersey ran aground in November (see Daily GPI, Nov. 22).

Meanwhile, thanks to the shale gas boom in the United States, LNG export projects from North America continue to gain steam. Earlier this month Sempra LNG Marketing LLC received approval from the U.S. Department of Energy Office of Fossil Energy to begin exporting previously imported LNG from the Cameron LNG Terminal in Cameron Parish, LA, beginning Feb. 1, provided an affiliate receives the necessary FERC authorization (see Daily GPI, Dec. 9).

In May 2009 FERC granted a request of Freeport LNG Development LP for authority to re-export LNG (see Daily GPI, May 11, 2009). In October 2008 FERC said Sabine Pass LNG LP not have to go through the mandatory pre-filing process for modifications to allow LNG re-export from its terminal in southwest Louisiana (see Daily GPI, Oct. 10, 2008).

And in Canada, KM LNG Operating General Partnership earlier this month filed with Canada's National Energy Board (NEB) for approval to export LNG from the planned Kitimat LNG Terminal at Bish Cove in British Columbia (see Daily GPI, Dec. 13). At one time the Kitimat project was intended to be an LNG import and regasification terminal; however, it was switched to a liquefaction project as it became apparent that global markets could be attractive targets for western Canadian gas (see Daily GPI, Sept. 23, 2008).

©Copyright 2010 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.