FERC dismisses LNG application but Quoddy Bay plans to refile -- The Quoddy Tides, Eastport, Maine

The Federal Energy Regulation Commission (FERC) has dismissed the application submitted by Quoddy Bay LNG to construct a liquefied natural gas (LNG) terminal facility at Pleasant Point and Perry and a proposed pipeline to connect with the natural gas pipeline in Baileyville. FERC, in a letter dated October 17, informed the Oklahoma-based company that the agency could not proceed with its engineering review or with the preparation of the draft Environmental Impact Statement for the project because Quoddy Bay LNG had failed to provide information the agency had requested. FERC's letter, from J. Mark Robinson, director of the Office of Energy Projects, states: "To date Quoddy Bay has not provided the previously requested information, nor has Quoddy Bay provided any further information regarding the possible revisions to the project disclosed in its February 29, 2008, filing. Therefore I am dismissing your application for the construction and operation of a LNG import terminal." In addition, FERC is dismissing Quoddy Bay's pipeline application and a blanket certificate to perform certain routine activities.

Earlier, FERC had informed Donald Smith, president of Quoddy Bay LNG, that it was putting Quoddy Bay's applications on hold pending more information. The failure to receive the requested information led to the October 17 dismissal of the application. The FERC letter states the agency is dismissing the application "without prejudice," allowing Quoddy Bay to file a new application in the future.

FERC spokesperson Tamara Young-Allen says if Quoddy Bay files a new application in the future the application will be examined as a new proceeding. Public informational hearings would be required again, as would other steps taken during the original application.

Donald Smith, commenting on the letter from FERC, says, "It's a little embarrassing. We had intended to withdraw our application in the next few months. FERC's dismissal of the project doesn't change anything. We have been going slowly in answering the questions that FERC had asked us. We were going slowly because of the worldwide situation. We were hoping to resolve what type of LNG resource we would use. LNG heat content varies from country to country, and sometimes there is a need to construct a nitrogen plant to dilute the high BTU content of the gas. Quoddy Bay has not yet determined the type facility needed.

"Depending on whether we get LNG with normal heat content, we can save 80 to 100 million dollars," Smith says. "We have been going slowly, but a lot of work has been done on other aspects of the project. The situation is because of the supplier. The amounts are not available to close a deal or be sure of the kind of a deal."

Smith says, if the proceedings have to start over with the submittal of a new proposal to FERC, "it is not a great deal. We think we will start pretty much were we were yesterday. Engineering, safety and environment issues will be the same. The air quality permit may be different." The only issue for Smith is the nitrogen content.

Fred Moore, a member of the Passamaquoddy Tribal Council at Pleasant Point, says, "We are actually in the process of scheduling a discussion with Quoddy Bay LNG officials. It is premature to speculate on what might come out of these discussions." Moore notes, "We have a lease agreement with Quoddy Bay, and that is the document which governs the relationship." He expects the discussions will be held within the coming weeks.

Moore says, "The dismissal of the application at this time comes as no great surprise because, based on various reports, the application efforts appeared to be slowing down."

Adam Wilson, who served as deputy project manager at Quoddy Bay's office in Perry, is no longer with the company. Andrea Barstow, who had staffed the office, also is no longer working for Quoddy Bay.

On October 21, attorneys representing Save Passamaquoddy Bay 3-Nation Alliance and other intervenors, in a letter to the Maine Board of Environmental Protection (BEP), requested that the board require an immediate affidavit from Quoddy Bay LNG addressing if Quoddy Bay's BEP applications should be dismissed. At the present time, Quoddy Bay's applications to the BEP are on hold. The intervenors believe FERC's dismissal raises several significant concerns about the completeness of the applications pending before the BEP. The intervenors believe that a stay should not serve as an indefinite place holder. In the letter, they state, "An indefinite stay would continue the pall cast over other forms of regional development, including investment in the tourism and fishing industries." The letter continues, "Further LNG technology needs and impacts will invariably change over the next few years. In sum, Quoddy Bay's application will be stale, and in the meantime will stagnate other potential development."

Jim Dusch, the BEP's policy director, says the Quoddy Bay LNG application is still pending. The company asked the BEP to put it on hold, and the board had agreed to the request. "It doesn't directly affect what the board will do," says Dusch of FERC's dismissal. He says there is a difference between permits from the state and ones from FERC.