Members of the Passamaquoddy Native American tribe, having lost out in an earlier bid to open a gambling casino, voted in favor of locating an LNG import terminal on their Sipayik Reservation on Passamaquoddy Bay on the northern Maine coast. The vote was 193 to 132, in what Tribal Representative (to the state legislature) Fred Moore III said was the highest turnout ever for a special election.

The referendum was on a proposal by Quoddy Bay LLC, a recently formed energy development company, to build an import terminal about 30-40 miles east of the Maritimes & Northeast Pipeline on a peninsula called Pleasant Point, near the Canadian border. The terminal would be located adjacent to the commercial shipping port at Eastport, ME (see NGI, June 14).

A spokesman for the Quoddy Bay developer claims a preliminary analysis by an LNG engineering firm indicates that the site would be a very good location for a terminal. However, an in-depth engineering analysis still needs to be done and no details on the project were available.

Proposals by TransCanada PipeLines and ConocoPhillips to locate LNG import terminals at other points along the Maine coast have been blown away by local protests, despite support from the governor of Maine for an LNG terminal in the state.

The Quoddy Bay development firm has not revealed whether potential sponsors have expressed interest in the project. Moore said the company was recently formed specifically to address the LNG opportunity and he expected they would act as brokers to engage larger sponsors in the project.

Principals in the firm are mostly from Oklahoma and include Don Smith of Smith Cogeneration and Bill Pritchard of the law firm of Hall, Estill, based in Tulsa. Stuart Price, who has an oil and gas firm in Oklahoma and was recently appointed a regent of the state university system, is president of the partnership. Jim Mitchell, who had met Moore in the Maine state capital while working government affairs for the Maritimes & Northeast Pipeline, also is a principal and is credited with making the connections with the Maine LNG enterprise. The company has opened an office in Augusta, ME.

“We do believe we have a very good prospect; we’re very pleased with the vote; we’ve made substantial progress in a very short period of time; but we have a long, long, long way to go. We’re going step by step; there are a lot of pieces to put together,” Mitchell said Wednesday. He predicted, however, that there would be a definitive agreement with the tribe “very quickly.” The group currently has an exclusivity agreement with the tribal council.

Tribe members who oppose the terminal have told local newspapers they will continue their efforts to block the development, and there have been indications some adjacent jurisdictions may mount protests. Maine Gov. John Baldacci has encouraged communities to consider hosting an LNG terminal.

In Maine, Native American tribes have only limited elements of sovereignty on their reservation, but they do have the rights and privileges of a municipality and can operate as local government entities. If the LNG entity is organized as a tribal entity it would not be subject to federal taxes, nor would it be subject to local property tax.

Moore said the next step was to write a definitive agreement with Quoddy Bay. The option for 100% tribal ownership will be explored. He explained that in the development of casinos on Native American reservations, the usual form is to have the tribe own the facility, contracting management out to the developer. In addition to other payments, the tribe would receive money that was saved by not having to pay taxes.

The initial offer from the developer would give the tribe annual payments of $4-8 million, with the potential for $20 million annually in tax savings. Tribal members would receive individual payments of $1,000 a year and would be employed on the project. Unemployment on the reservation is about 50%.

A plan endorsed by the tribe to locate a casino on the reservation was voted down last year in a statewide referendum. Moore said the state does not have the authority to refuse the LNG terminal, “and besides, the state is in favor of it.” Moore said the project still would be subject to the usual regulatory approvals from FERC and U.S. maritime authorities for siting.

For the state of Maine, an LNG import terminal could mean 3,100 jobs and expenditures of $161 million a year during the construction phase, generating $6.5 million directly in state taxes, according to a report by Laurie G. Lachance, an economist with the Maine government.

In her presentation to a Brunswick, ME, public symposium in late July, Lachance estimated once the project went into operation there would be $75 million a year in total expenditures and $1.7 million for the state in taxes. She estimated an income multiplier of 9.2% and a jobs multiplier of 23.6%.

Imports of LNG at Quoddy Bay would tend to stabilize natural gas supplies and lower prices in New England. Those lower natural gas prices in turn would likely lower electric power prices and the prices of competing fuels, Lachance said. One immediate result would be to avoid a 35-cent tariff increase for Maine by Maritimes & Northeast Pipeline since the infusion of regasified LNG would likely make the increase unnecessary.

Moore, who organized support for the project with the tribe, said he had to overcome strong opposition. “But I stressed the real benefits to the tribe. We will convert the reservation from heating oil to natural gas, with the prospect of generating our own electricity. This will remove our dependence on an outside utility. We will move toward self-sufficiency.” The tribe has about 600 voting members, but a number of them live off the reservation. Voters for its regular general elections average about 400, but the most that have previously voted in a special election is about 150, Moore said.

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