The Saint Croix Courier

St. Stephen, NB

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2007 Mar 27

LNG company asks FERC to stop Canadian gas

PERRY, Me. — Quoddy Bay LNG filed a "Request for Rehearing and Modification" today with the Federal Energy Regulatory Commission (FERC), asking for a condition to be placed on the Maritimes and Northeast Pipeline permit that could effectively resolve the current international debate surrounding LNG facilities in Maine.

On Feb. 21, Maritimes received approval from the FERC to expand its existing pipeline which will allow Canada's Canaport LNG to use the pipeline to carry Canadian natural gas to the U.S. market. This approval came on the heels of the Canadian government's assertion that it will not allow LNG tankers to pass hrough the Canadian waters of Head Harbour Passage to deliver their cargo to U.S.-based LNG facilities.

Quoddy Bay's filing states: "[It] believes that an error occurred inissuing the certificate...to Maritimes because the Commission has not placed conditions upon the authorization to begin delivery of Canadian gas through the new pipeline facilities."

Quoddy Bay President Don Smith made it clear that the purpose of this filing is to ensure open and free competition between the U.S.and Canada. "Our ultimate goal is to achieve healthy competition to provide low cost energy to New England and benefit U.S. consumers."

Smith went on to explain, "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."

Quoddy Bay representatives believe that open market-based competition can be maintained if the FERC requires reciprocity in market access.

Quoddy Bay is requesting the FERC to amend the Maritimes permit to prohibit the flow of gas from Canada to the United States through the pipeline if the Canadian government bans LNG tanker access to Maine.

Therefore, under this condition, Canadian companies can only utilize U.S. open market access if it allows U.S. companies to do the same.

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 and its corresponding benefits.

"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," continued 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."

The filing summarizes "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."

This issue has recently reached the highest levels of government on both sides due to Canadian Ambassador Michael Wilson's letter last month to FERC Chairman 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 State Department officials demonstrate they believe that the right of free and innocent passage through Head Harbour Passage is granted under international law.

"Canada and the United States have traditionally benefited from a mutually advantageous energy relationship, and we are merely asking both governments to maintain our right to become a competitor in the natural gas market,"concluded Brian Smith.