Maine's Calais LNG loses its No. 1 financial backer

Quentin Casey, Telegraph-Journal (Nt. John, NB), July 23, 1010

The main financial backer of a plan to build a liquefied natural gas terminal in Calais, Maine is stepping away from the controversial project.

Downeast LNG Inc.'s rendering of what their proposed liquefied natural gas terminal and import facility in Robbinston would look like from a bird's eye view.

On Wednesday, Calais LNG - the company behind the proposed terminal and pipeline - sent a letter to Maine's Board of Environmental Protection, requesting the board postpone today's meeting on the project.

"Calais LNG currently is in the process of transitioning ownership interests and financial backing of the project to another entity," states the letter.

"In particular, GS Power Holdings, LLC, the managing member of Calais LNG, is in the process of selling its interest in the project to a new financial partner. "

In the letter, Calais LNG says it expects the sale to occur within three weeks, at which time another "conference of counsel" could be scheduled.

However, the letter also hints the project could be in trouble if the sale collapses.

"In the event that the transaction noted above does not close by August 11, Calais LNG would expect to withdraw all Calais LNG applications filed with the Maine Board of Environmental Protection," states the letter.

The Calais LNG project, which the developers previously said is supported by investment banking giant Goldman Sachs, calls for an LNG terminal and storage facility to be built on the St. Croix River in Calais.

The proposal also includes a pipeline to connect the terminal to the Maritimes & Northeast Pipeline, which flows from Nova Scotia into New England.

On Thursday, news of the shakeup within Calais LNG led the project's opponents to reach one conclusion: the plan is foundering.

"It looks to me like Goldman Sachs has figured out that this is not going to be a profitable venture. To be blunt, they're ditching the project - that's what it looks like to me," said Robert Godfrey of Save Passamaquoddy Bay, a group of citizens on both sides of the Canada-U.S. border who oppose LNG development in the bay.

The group argues that local LNG projects would put residents at risk, hurt the local fishery and kill tourism in the area.

"We're hoping this is the last gasp for Calais LNG, but we don't know yet," Godfrey said in an interview from Eastport, Maine.

Arthur Gelber, Calais LNG's development manager, did not immediately respond to requests made for an interview on Thursday.

Local residents, however, are not alone in their protest of LNG terminals in the bay.

In January, the Graham government called on FERC to quash the proposed Calais terminal, saying the project poses "unacceptable risks to New Brunswick".

In a motion filed to FERC, lawyers for the province outlined a host of reasons why the proposal should be rejected.

"In addition to the potential risks to the safety and welfare of those living and working near the LNG vessel transit route, there are also potential economic impacts," stated the letter, dated Jan. 27.

"For example, LNG vessel traffic is likely to impose a serious impact on commercial fishing, aquaculture facilities and Canadian tourism. Many New Brunswick citizens depend on the resources in this area for their livelihoods."

The province's letter also emphasized the Canadian government's position on the matter: that it will forbid LNG tankers from entering the bay.

The Canadian government considers the area internal waters, but it is also the only route available for tankers to access the proposed terminal sites in Maine.

"Remarkably, Calais LNG ignores this substantial obstacle," stated the January letter.

In a previous interview, Gelber disputed the province's concerns, noting that large vessels already travel the proposed tanker route.

And according to Gelber, many people in St. Stephen - on the New Brunswick side of the border - are "very excited" about the jobs and economic spinoffs the Calais project will bring to the area.

"They feel that anything good for Calais is good for St. Stephen. We see tremendous support in the local communities," he said in January, noting the project could cost upwards of $1 billion and be completed by early 2014.

The Graham government is also protesting a similar project under consideration by FERC. Downeast LNG, proposed for Robbinston, Maine, would sit directly across from St. Andrews, N.B.

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