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) last 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 and the Federal Energy Regulatory Commission (FERC) last week indicated that it might cease processing the proposal (see NGI, Dec. 13), 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 NGI, Sept. 27) and had trouble acquiring some of the land needed to site the project, according to MBEP. A public hearing had been scheduled in July, but MBEP put the project on hold at Calais LNG’s request. Since then, “Calais LNG has lost title, right or interest in a significant portion of the property proposed for development and has failed to resolve financing issues such that its applications are now devoid of any demonstration of financial capacity,” according to Lessard’s draft order. In addition, Calais LNG “has not addressed the technical issues which were the basis for the first time extension request in July.”

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.

Analysts at PIRA Energy Group last week factored “modest” LNG exports into their long-term outlook, but said numerous challenges must be overcome before the first LNG export tanker sales from Western Canada or the U.S. Gulf of Mexico (see related story).

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