LNG: Downeast LNG only one left trying to build gas terminal in Maine

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February 29, 2012 – 5:34pm BY PETER MORTON

English: Boston, Mass. (Aug. 25, 2004) - A 25-...

English: Boston, Mass. (Aug. 25, 2004) – A 25-foot U.S. Coast Guard boat assigned to the Coast Guard Station Boston, Mass., provides a security escort for the Liquefied Natural Gas (LNG) Tanker Matthew in Boston Harbor. Escort of LNG Tankers are a multi-agency priority, consisting of Coast Guard, local and state police, and Massachusetts Environmental Patrol. U.S. Coast Guard photo by Public Affairs Specialist 3rd Class Kelly Newlin (RELEASED) (Photo credit: Wikipedia)

It is the most unlikely of energy projects, in the most unpopular of locations and facing exceedingly difficult economics.

But the controversial Downeast LNG project planned for Mill Cove at Passamaquoddy Bay in Robbinston, Maine, has one thing going for it.

“We are the only ones left,” says Dean Girdis, founder and president of the company proposing the US$600-million terminal.

Girdis, who worked at the Work Bank in Washington, originally proposed to build as many as two terminals to receive liquefied natural gas from ocean tankers, feed it into the Maritimes and Northeast Pipeline and move it to the gas-starved Boston area.

According to the U.S. Northeast Gas Association, natural gas now provides about 24 per cent of New England’s energy needs, a much larger share than it once was for a region that is largely dependent on home heating fuel or wood during the winters.

The East Coast market for liquefied natural gas on both sides of the border, brought from places like the Middle East or the Caribbean and compressed to about 1/600th of its original size before being loaded into tankers, was thought to be a more economic alternative to oil.

The Downeast LNG liquefied natural gas terminal project is one of three that were originally
proposed nearly a decade ago for Passamaquoddy Bay. Two of the projects are in limbo.

The company initially proposed building two tanks but is now suggesting it construct just one. It would to feed liquefied natural gas from tankers into the nearby Maritimes and Northeast Pipeline, a roughly 1,200-kilometre pipeline built to bring offshore Sable Island gas to the Boston-area market.

In operation since 2001, the pipeline was built to deliver Sable Island gas and that project is winding down. The pipeline also receives liquefied natural gas from the Canaport LNG Ltd. terminal in Saint John, owned by Irving Oil and Repsol YPF.

And that terminal is not running at full stream. Canaport can produce about 1.2 million cubic feet a day of liquefied natural gas, although it is now running at less than half capacity.

If that were not enough, Downeast LNG has run into a daunting wall of opposition ranging from a refusal from Ottawa to allow liquefied natural gas tankers to go through Canadian-controlled waters at Head Harbour on the Bay of Fundy.

“LNG tankers are not going to go through Head Harbour Passage,” insists John Williamson, the Conservative MP for New Brunswick Southwest. (Transport Canada bureaucrats, who have been closely involved in the long-running debate, were not available for comment.)

The outspoken Downeast LNG opponent Robert Godfrey, researcher and webmaster for the Save Passamaquoddy Bay 3-Nation Alliance, insists the risks of transporting liquefied natural gas on the somewhat difficult waters of the bay far outreaches the benefits.

“Police, security, fire and ambulance capability on the U.S. and Canadian land sides of the LNG ship transit route ….. all make clear the inability for Downeast LNG to succeed,” Godfrey says.

Still, Girdis says he expects to get environmental approvals from the U.S. government by May or June and then apply to the State of Maine for its permits. About 100 commercial vessels navigate the waters each year.

However, it may be energy economics — not politics — that may be trickiest thing for Downeast LNG to overcome.

Although liquefied natural gas was once seen as the best hope for the gas-starved U.S. northeast, the latest energy trend in North America is to export liquefied natural gas from terminals on the West Coast.

Canada’s National Energy Board just recently gave its blessing to the first-ever liquefied natural gas export terminal in Kitimat, B.C., owned by Apache Canada Ltd., EOG Resources Canada Inc. and EnCana Corp. The gas is heading to the Asian Pacific region where the prices are higher than North America.

Analysts also doubt the need for new liquefied natural gas import terminals that convert densely compressed gas back to natural gas in a process called regeneration.

“I can’t see any need for new regas capacity,” says Calgary oil and gas analyst Andrew Potter with CIBC.

“The trend lately is converting regas facilities to liquefaction.”

Despite the politics, economics and the complicated issue over who has the rights to Head Harbour Passage, Girdis says he is determined to press ahead.

New England can’t get enough gas, he says.

“It’s a small niche,” he says. “But it’s a niche market.”

Peter Morton is a freelance writer based in Washington.

(business@herald.ca)

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Comments

LNG: Downeast LNG only one left trying to build gas terminal in Maine — 1 Comment

  1. The Latest Update to the Save Passamaquoddy Bay website:

    FERC > LNG Project Review Process > eLibrary Dockets > Formal Filing Docket Comment Submissions >Downeast LNG — CP07-52, CP07-53, CP07-54, CP07-55 > 2012 September

    * Sep 28 —Save Passamaquoddy Bay — A 2004 published study by the US Environmental Protection Agency (as secondary author) demonstrates toxic mercury contamination of the Saint Croix River Estuary. Downeast LNG’s proposed 4,000-foot long jetty and pier construction would likely contaminate fish consumed by Native American/First Nations subsistence fishers, by US and Canadian consumers, and would likely contaminate protected marine mammals. That would violate federal Environmental Justice obligations and safe food practices.

    Save Passamaquoddy Bay asks FERC to dismiss Downeast LNG’s applications, or at the very least to deny Downeast LNG of permits.

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