FERC Thursday denied Quoddy Bay LNG LLC’s request for a reciprocity condition that would bar the flow of natural gas through expanded U.S. pipeline facilities from a proposed Canadian liquefied natural gas (LNG) terminal until the Canadian government has withdrawn its threat to block U.S.-bound LNG tankers from traversing its waters.

In March, Quoddy Bay sought rehearing of a February order that authorized Maritimes & Northeast to double the capacity of its system to accommodate regasified LNG from the 1 Bcf/d Canaport LNG import terminal being built by Irving Oil and Repsol in New Brunswick to supply the U.S. Northeast (see Daily GPI, Feb. 16). The $321.3 million Phase IV expansion project includes an additional 1.7 miles of 30-inch diameter pipeline looping that would extend from the St. Croix River at the U.S.-Canada border to Maritimes’ Baileyville, ME, compressor station. FERC also approved Maritimes’ request to amend its presidential permit to permit increased volumes.

Quoddy Bay asked FERC to place a reciprocity condition on the Maritimes’ expansion that would allow construction of the project to proceed, but would prohibit the flow of gas through the new facilities until the Canadian government allows passage of LNG carriers through Head Harbour Passage, a treacherous stretch of water that straddles the U.S.-Canadian border. Canada’s decision to block passage would prevent LNG tankers from reaching the proposed Quoddy Bay and Downeast LNG terminals in Maine.

“We deny rehearing” of the certificate order approving the Maritimes’ expansion, the order said [CP06-335, CP96-810]. “We find that this proceeding is not the proper forum for addressing the issue of LNG carrier passage through Head Harbour Passage because this issue does not affect the viability of Maritimes’ project and is, therefore, not relevant to this proceeding,” it noted. The issue would be “more appropriately addressed” in the Quoddy Bay and Downeast LNG proceedings, the order said.

Approving Quoddy Bay’s request “would not be appropriate because it would impose a condition on Maritimes over which it has no control,” FERC said. “Additionally, Maritimes would be placed at risk for the recovery of its capital expenditures for the Phase IV project (estimated at over $300 million) until such time as the Canadian government permits the passage of LNG carriers through Head Harbour Passage in two projects that are unrelated to Maritimes’ proposal,” the order noted.

In a letter to FERC in February, Canadian Ambassador to the U.S. Michael H. Wilson said Canada would not permit large LNG tankers to enter Head Harbour Passage, a narrow stretch within Passamaquoddy Bay off the coast of southwestern New Brunswick, due to the environmental and navigational risks (see Daily GPI, Feb. 16).

In a response, FERC Chairman Joseph Kelliher said the agency would continue processing the applications for the Quoddy Bay and Downeast LNG projects in Maine despite growing opposition by Canadian officials to LNG tankers traversing their waters (see Daily GPI, March 12).

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