The Saint Croix Courier

St. Stephen, NB

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2007 February 20

LNG letter won't deter developers

By KATHY BOCKUS

ST.STEPHEN—When does no not mean no?

Apparently when you think like the two American developers trying to establish liquefied natural gas (LNG) terminals in Maine.

Last week, on Valentine's Day, the Canadian government, through Michael Wilson, its ambassador to the United States, informed the chairman of the Federal Energy Regulatory Commission (FERC) that Canada would not allow LNG tankers through the sovereign Canadian waters of Head Harbour passage, the only nautical way to access the proposed sites for three proposed LNG terminals.

These projects are currently under review by FERC.

But both the companies behind these projects released statements late last week indicating that despiteCanada's stand to not allow LNG tankers through Head Harbour Passage, they intend to forge ahead with the plans for their projects.

"We have absolutely no intention of modifying or withdrawing our permit applications to state and federal authorities based on this letter, and we remain confident that the Downeast LNG project will be approved on it merits, stated Dean Girdis, the president of Downeast LNG.

"Quoddy Bay LNG will continue to move forward with the development of a liquefied natural gas import and regasification facility in Washington County, Me.," Quoddy Bay LLC project manager Donald Smith stated in a press release issued the day after Ambassador Wilson's letter was made public.

U.S. Senator Kevin L. Raye [Raye is a Senator in the Maine legislature, not a US Senator — webmaster] has denounced Ambassador Wilson's letter, saying it represents "a serious challenge to U.S. sovereignty" and advises that, "every American should be concerned about the dangerous precedent it would establish for a foreign country to control access to our ports."

Sen. Raye levelled accusations at what he called "the powerful Irving Group of Companies" which he said brought to bear considerable influence shaping public opinion in the province with its newspapers while at the same time building its very own LNG terminal in Saint John.

The senator said if Canada follows through on its threat, the U.S.government has a responsibility to ensure such actions are met with "immediate and commensurate consequences," suggesting that authorization be withheld for Canadian LNG interests to tap into gas pipelines that run through Maine and that Canadian passage through U.S. waters on the west coast could be affected.

Girdis stated his company "was confident that the U.S. government will reject this attempt by Canadian politicians to interfere in what will be a comprehensive review of the Downeast LNG project by FERC, the leading U.S. regulatory authority on energy matters."

Girdis added that any attempt by Canada to stop the LNG tankers from traveling through Head Harbour Passage would set "an extremely dangerous international precedent with severe implications on international maritime commerce worldwide."

Girdis stated that he found Ambassador Wilson's comments in his letter to FERC to be "hypocritical and contradictory," noting that the ambassador has previously stated Canada wanted to participate in the U.S. regulatory process.

"His comments also are surprising in light of the recent request by the province of New Brunswick for formal intervener status in the FERC review of our project, a request we support," stated Girdis.

Girdis argued that the Downeast LNG project would provide a much needed source of clean-burning natural gas to U.S. energy markets in the northeast.

"It is a safe and environmentally sound project that will create good paying jobs and provide sustainable economic development in Washington County," stated Girdis.

Meanwhile, Quoddy Bay LLC president Donald Smith has sent a letter to US Secretary of State Condoleezza Rice, outlining the company's position and requesting that the U.S. State Department clarify its position on the matter.

Quoddy Bay LLC project manager Brian Smith stated he was confident that State Department lawyers would agree, "that an attempt to prevent LNG vessels from using Head Harbour Passage violates international laws and agreements."

Wilson's letter mentioned a study that revealed LNG tankers passing through "the environmentally sensitive and navigationally challenging marine and coastal areas of the sovereign Canadian waters Head Harbour Passage, posed "risk to the region of southwest New Brunswick and its inhabitants that the government of Canada cannot accept."

"We are therefore prepared to use domestic legal means to address our concerns and prevent such passage from occurring," wrote the ambassador.

However, Brian Smith is challenging the ambassador to share the information in the study to which he refers.

"Our ship simulations that included participation from local Canadian pilots and Transport Canada confirmed that the waterway is suitable for the vessels that will come to our facility," stated Smith in his press release.

"Furthermore, this waterway has been used for centuries by both countries to conduct peaceful commerce. We hope that our long time friends and energy partners to the north will continue to uphold existing practices so that we can move forward amicably," Smith concluded.

Ambassador Wilson's letter advises Kelliher to contact the LNG proponents and inform them of Canada's decision "so that the proponents could withdraw or amend their project applications," taking into account Canada's position.

"This will save them from having to expend resources on projects which cannot proceed as currently envisioned," writes Ambassador Wilson.