The Saint Croix Courier

2008 Oct 31

Regulator issues warning to pipeline builder

By BARB RAYNER

ROBBINSTON, Me. — The Federal Energy Regulatory Commission (FERC), which last week dismissed Quoddy Bay LNG from the federal permitting process for failing to provide answers to their questions, have also issued a warning letter to Downeast Pipeline.

Downeast Pipeline is the natural gas “take-away” project affiliated with the Downeast LNG terminal project being proposed for Robbinston, Me.

In a letter to Robert Wyatt, of Downeast Pipeline, FERC notes that in a September letter in response to a staff data request, Downeast Pipeline indicated that it would inform the commission staff of its open season schedule once they have issued the draft EIS (environmental impact statement) for this project.

The letter says it is the commission’s policy that all new interstate pipeline construction be preceded by a non-discriminatory, non-preferential open season process to, among other things, garner critical information needed to assess market interest in the project, as well as capacity and design requirements, and pipeline route and delivery lateral options. This critical information could affect project design and route specifications, which in turn, could require significant project changes. In the letter J. Mark Robinson, director of FERC’s Office of Energy Projects, continues, “Considering the uncertainty of the outcome of the environmental analysis, the fact that you have not attempted to garner the critical project information that you would obtain through holding an open season, and the passage of nearly two years since the filing of the application, we must reassess whether Commission staff’s continued efforts and analysis are appropriate under these circumstances.” If Downeast desires the Commission staff to continue its current review, then within 20 days of the date of this letter Downeast must provide its schedule for conducting open season(s) for this project in the near term or sufficient justification as to why it does not need to conduct them in the near term. We note that in the alternative, Downeast may withdraw its application now and reapply at a latter time without prejudice.”

Meanwhile Downeast Pipeline, LLC, an affiliate of Downeast LNG, has this week submitted a letter to the Federal Energy Regulatory Commission (FERC) informing the agency of its intent to conduct an “open season” to gather information that will be used to assess market interest and allocate capacity in the project‘s sendout pipeline.

Conducting an open season is a standard element in the development of interstate natural gas pipelines subject to FERC jurisdiction. It allows companies to express an interest in using some of the capacity of a pipeline such as the one proposed by Downeast LNG to connect its LNG import terminal with the existing Maritimes & Northeast Pipeline, and ensures that such capacity is allocated on a non-discriminatory basis.

According to company president Dean Girdis, Downeast’s open season will commence on Nov. 3 and last for 30 days. Downeast then will report the results to FERC.

“We are pleased that Downeast LNG project remains under active consideration by FERC,” said Girdis. “The open season is simply one more step on the road to project approval.”