Ottawa unmoved by positive LNG study

Shawn McCarthy
Globe and Mail
October 6, 2007

A federal study has concluded that LNG tankers could navigate Head Harbour Passage off the Bay of Fundy with little risk of accident, but Ottawa continued to insist yesterday that it will bar U.S. tankers from the disputed waters.

Proponents of the competing LNG plants proposed for northern Maine have seized on the study - which was released on an obscure federal website - to argue that the Canadian government has exaggerated the safety concerns in order to favour domestic producers.

The federal government has refused to co-operate with U.S. regulators who are reviewing three separate plans for terminals that will regasify imported liquefied natural gas and pipe it to markets in the U.S. Northeast.

Earlier this year, Canada's Ambassador in Washington, Michael Wilson, wrote to U.S. Secretary of State Condoleezza Rice that the projects "present risks to the region of southwest New Brunswick and its inhabitants that the government of Canada cannot accept."

However, the report by Toronto-based Senes Consultants Ltd. said there have been no serious accidents involving LNG tankers in the nearly 50 years they have been in use.

"While large accidents involving the shipping and handling of LNG are possible, the probability of occurrence is small, especially with Canadian and U.S. regulation in place and enforced," it said.

It added the risk of incidents involving the uncontrolled release of liquefied natural gas is "very small."

Still, the Senes report noted the tricky waters of Head Harbour Passage require extremely careful navigation and that the surrounding eco-system could be severely affected by the discharge of fuel or LNG from tankers.

Dean Girdis, president of Downeast LNG Inc., said the report will be helpful as the U.S. Coast Guard and Federal Energy Regulatory Commission prepare their environmental impact statement, a process that should be completed by early 2008.

"I don't see how the study supports the conclusion that it is unsafe for ships to navigate Head Harbour Passage," Mr. Girdis said in an interview yesterday. "There is nothing in the study that concludes our project should not proceed."

Mr. Girdis said he believes - with backing for some Canadian academics and the U.S. state department - that tankers heading for a northern Maine terminal would have the right to traverse Canadian waters.

"They may maintain their position on no transit but there is no law or regulation which restricts LNG traffic going through Head Harbour Passage," he said. "And according to our lawyers, it's clear that it is Canadian waters, but that you have right of passage through it."

But Veteran Affairs Minister Greg Thompson, the government's senior New Brunswick minister - said the proponents face other hurdles - including opposition to their pipeline routing and lack of sources of LNG. But should they proceed, Canada will oppose all LNG tanker traffic through head Harbour Passage, he said.

"This particular location is not a smart location, it's not a safe location," Mr. Thompson said. "And we consider those internal Canadian waters so we have a responsibility to protect our citizens, protect the environment and protect the economy."