Pipeline firm calls Quoddy Bay LNG's request 'misguided' -- The Quoddy Tides, Eastport, Maine

Maritimes & Northeast Pipeline LLC, which is planning to expand its natural gas pipeline in Maine to allow for additional volume from the Saint John liquefied natural gas (LNG) terminal, has filed a response to Quoddy Bay LNG's March 23 request to the Federal Energy Regulatory Commission (FERC). Quoddy Bay had asked FERC to amend the Maritimes permit to prohibit the flow of gas from Canada to the United States through Maritimes' pipeline if the Canadian government bans LNG tanker access to Maine. Maritimes' response refers to Quoddy Bay's filing as "a misguided effort to exert pressure on the Canadian government and influence Canadian policy."

Quoddy Bay's request "has no relevance" to the Maritimes pipeline expansion project, comments Marylee Hanley, manager of government and public affairs for Maritimes and Northeast, which is owned by affiliates of Duke Energy, Exxon Mobil Corporation and Emera Inc. "None of the issues raised by Quoddy Bay are within FERC's jurisdiction." Maritimes and Northeast plans to begin construction of the $321 million expansion project this summer. The project includes five new compressor stations in Maine and 1.7 miles of pipeline loop in Baileyville. Quoddy Bay's request would delay the start of that project.

On February 21, 2007, Maritimes received approval from FERC to expand its existing pipeline, which will allow the Canaport LNG import terminal in Saint John, a partnership of subsidiaries of Repsol YPF and Irving Oil Limited, to use the pipeline to carry natural gas to the U.S. market. This approval followed the Canadian government's statement that it will not allow LNG tankers to pass through the Canadian waters of Head Harbour Passage to proposed LNG facilities on Passamaquoddy Bay, including the Quoddy Bay LNG proposal for Split Rock.

Quoddy Bay President Don Smith stated that the purpose of his company's filing is to ensure open and free competition between the U.S. and Canada. Smith commented, "This filing is an effort to ensure that Canada does not take advantage of U.S. free market policies while at the same time blocking Quoddy Bay's access to the market by prohibiting access to the facility."

Since the mid-1980s, the U.S. has granted Canadian companies access to its pipelines, thereby giving those companies access to the U.S. market. "The Canadian Government's request for the FERC to stop its review of our project while at the same time exploiting its non-discriminatory policies for its own ends should be considered an abuse of the FERC process," stated Brian Smith. "We are only asking for Canada to treat U.S. companies fairly and equally, the same way the U.S. currently treats Canadian companies."

Quoddy Bay's filing states that "access on a fair, non-discriminatory and timely basis to Head Harbour Passage is just as essential to Quoddy Bay as access to the Maritimes and Northeast Pipeline is to Canaport." Quoddy Bay LNG also plans to use the Maritimes pipeline for its proposed LNG terminal at Pleasant Point.

This issue has recently reached the highest levels of government on both sides, following Canadian Ambassador Michael Wilson's letter in February to FERC Chairman Joseph Kelliher. The letter outlined Canada's plans to ban LNG tanker passage through its waters. In response, Chairman Kelliher stated the review of the Maine LNG projects will continue despite Canada's position. Recent statements from U.S. State Department officials demonstrate they believe that the right of innocent passage through Head Harbour Passage is allowed under international law.

In its filing to FERC, Maritimes states that the actions of the Canadian government are unrelated to its expansion project, and granting of Quoddy Bay's request would delay the expansion and delay the benefits promised to U.S. natural gas consumers. The filing states that "Quoddy Bay's request is without merit," because the issues raised are not within FERC's jurisdiction, since the commission is not charged with making determinations under international law. "Finally, considering that granting Quoddy Bay's requested relief would be unprecedented and could effectively delay construction of a project that is critically important to the energy needs of the northeast market and U.S. consumers and considering that the request itself is untimely and could have been raised more than ten months ago, Maritimes respectfully requests that the commission reject Quoddy Bay's request for rehearing as promptly as possible."