A Calais LNG official said Wednesday the company intends to move forward with plans to build a $1 billion liquefied natural gas (LNG) import terminal and pipeline project in Calais, ME, despite FERC’s rejection of a permit application for the project.

“We’ve got six years of work and more than $25 million invested in all of this,” Calais Development Manager Ian Emery told NGI. “We’re not prepared to walk away from all of that work and investment and the opportunity to provide additional natural gas to Maine, New England and the Maritimes.”

In its applications to the Federal Energy Regulatory Commission, Calais proposed building an import terminal on the St. Croix River with three storage tanks and 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.

FERC’s Jeff Wright, director of energy projects, said Calais had been asked three times to provide status updates, including the availability of a site for the project.

“Calais has yet to acquire either project financing or legal access to a project site,” Wright wrote in letter to the company earlier this month explaining why FERC was rejecting the applications. “Based on your latest update, Calais still has not secured its proposed site through purchase or an option to purchase and anticipates that evaluation by potential financing partners will continue for at least six additional months.

“Your continued inability to secure either financing or a site for the project is evidence that you are not currently in a position to proceed with this project.”

Emery said the company would eventually refile all of the permit applications for the project.

“For a good part of a year and a half, our team has been working on developing the necessary dollars to complete the regulatory work, but to also transition the project into eventual EPC [engineering, procurement and construction],” Emery said. “We’ve been spending a fair amount of time working on relationships on the supply side of these projects, as well as the downstream relationships.

“We’ve got a lot of work we’ve done; it’s just we’re not at a stage that we’ve been able to move forward in the review process with FERC at this time. Although we appreciate the time that they’ve given us, we’re going to need additional time. The decision by FERC allows us to come back once we’ve completed the commercial work we need to do and refile our application. That’s what we intend to do.”

Calais has raised $25.5 million for the project so far and needs to secure an addition $15 million, which would be used to purchase several parcels of land and fund the balance of work that remains to be completed between the permitting and EPC stages, he said.

“We believe [$15 million] would get us to the point where we are lining up our syndicated group of bankers that would want to handle the debt side of the project for our facility,” Emery said. The company had spent “a considerable amount of money optioning different parcels of land along this stretch of the St. Croix River. After five years, the owners’ desire is to sell their property and not enter into long-term option agreements to purchase the land.”

Asked if there was a time frame for the company to secure the land for its proposed facility, Emery said it would depend “on the amount of money we are able to raise here over the next several months. We believe the project is, and will be, an attractive investment opportunity for the marketplace. And we think that when we complete our next capital raise, it will be enough to finance the balance of the permitting work, to purchase the land and to get us through EPC.”

In September 2010 the U.S. Coast Guard declared the Passamaquoddy Bay Waterway suitable for LNG marine traffic (see Daily GPI, Sept 24, 2010). However, three months later Calais withdraw its permit applications with the Maine Board of Environmental Protection, citing at the time the economic downturn (see Daily GPI, Dec. 16, 2010).

Competing proposals to build LNG import facilities in Maine have had mixed results. Downeast LNG is still proposing to build a $600 million terminal in Robbinston, ME, but Quoddy Bay LNG LLC’s plans to build an import terminal at Split Rock, ME, have foundered (see Daily GPI, March 5; Oct. 29, 2008).

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