The front page of the Boston Globe last week presented a powerful, timely and cautionary tale about  two liquefied natural gas terminals  that sit off the coast of Gloucester and Salem. Those terminals are the tangible reminder of a massive push undertaken by energy industry insiders to build such terminals.  The intensity of that push, which began to build around 2002, becoming most intense during the 2004  to 2007 period and then petering out in the years since, contrasts sharply with the reality described in the Globe article: that those two offshore terminals have sat idle for the last two years.

That push to build LNG import facilities, which was such a mania in energy industry circles circa 2005, yielded some crazy ideas, like the proposal to hollow out a Boston Harbor Island and the infamous Weavers Cove project in Fall River. The offshore terminals, while the least bad of those proposals, reflected short sighted thinking detached from careful regional planning.  Both in terms of the need for these facilities and design decisions like regulators not forcing the projects to share one pipeline to shore instead of (as they did) twice disturbing the marine environment to build two duplicative pieces of infrastructure.

Today, the hue and cry is no longer about LNG, instead we are bombarded with impassioned demands for more natural gas pipelines as well as more measured discussions of the need for “smart expansions”. Will we have the collective intelligence to be smarter and more careful this time? Will the permitting process force consideration, as the law requires, of alternatives that make better use of existing infrastructure and pose less risk to the environment and the wallets of customers? Fixing natural gas leaks and becoming much more efficient in our use of gas is a key “supply strategy” that needs to be on the table and fully examined before committing to new pipelines.

And as it so often is, the overarching issue here is protecting future generations by addressing the climate issue. Science and prudent energy analysis, makes it clear that we need to put ourselves on a trajectory to end the burning of fossil fuels, including natural gas by the middle of this century. Given this reality every proposal to build massive and long-lived facilities to import more of those fuels must be viewed with great skepticism.

Passamaquoddy Bay. Courtesy of Jay Woodworth @ flickr. Creative Commons.

For some reason, the folks behind the last remaining proposed LNG import facility on the East Coast, Downeast LNG, are still pursuing their license from FERC to build a liquefied natural gas terminal on the shores of Passamaquoddy Bay here in Maine. And even more perplexing, FERC is still willing to spend time and resources on a project that the energy market is clearly saying makes no sense, or cents for that matter.

As our friends at Save Passamaquoddy Bay 3 Nation Alliance point out, Downeast LNG has “just become the sole remaining LNG import terminal on the entire continent.” In light of the already overbuilt capacity for importing LNG, the significant amount of domestic natural gas now flooding the market and bringing prices to an all-time low, and the number of import facilities that are now reversing course to become export facilities, the logic for continuing this quixotic adventure eludes us. For that very reason, FERC dismissed the application of the Calais LNG project, also slated for Passamaquoddy Bay and opposed by CLF in 2010. (Find CLF blog posts on Calais LNG here.) If anything, Maine should focus on more infrastructure to deliver gas to businesses and residents but new sources of natural gas supply are not needed now nor for the next foreseeable 50 years.

Perhaps it is time for FERC and Downeast Energy to face the music and realize that while a decade ago, LNG terminals  may have been a bridge to a better energy future that used less polluting energy sources, they are now a bridge to nowhere and should meet the same fate as that famous Alaskan boondoggle.

Last Wednesday, Calais LNG delivered its second major surprise in just two weeks.  After stunning all parties by asking the Board of Environmental Protection for a last minute hearing postponement, Calais LNG announced on July 21 that its financial backer, GS Power Holdings LLC, a subsidiary of Goldman Sachs, was in the process of “selling its ownership interests.”  Huh, go figure.  From our perspective, this just confirms that the smart folks at Goldman Sachs finally sat down after spending more than $24 million to take a hard look at the project and reached the same conclusion that we did long ago: the New England market is already saturated with natural gas and there is no need for a new industrial LNG terminal that will have significant adverse impacts on the environment and existing uses of Passamaquoddy Bay.

Calais LNG has promised to withdraw all of its applications for environmental approval if the company can’t find someone else willing to pay for the small army of lawyers and consultants by August 11, 2010.  Were the Calais LNG project to fade away, it would be the third LNG project in five years to withdraw its applications, joining Quoddy LNG and Downeast LNG.  And while there appears to be an obvious trend, namely failed projects and wasted time and money, Downeast LNG is still considering refiling with the BEP this summer.  If that is the case, we can only hope that the Board and State will have learned from past mistakes and not allow themselves to be bullied into unrealistically aggressive schedules for these complicated projects that will change the face and uses of Passamaquoddy Bay for generations to come.

Want to know more? Read this article in the Quoddy Tides.

After months of political and legal muscle flexing to bully the Board of Environmental Protection into setting an extremely aggressive hearing schedule, the proponents of a liquefied natural gas import and regasification industrial facility on the shores of Passamaquoddy Bay sought and obtained a last minute postponement.  Why? The official story is that the BEP didn’t want to make their decision without certain information that Calais LNG failed to submit in response to comments they received three months earlier from two state agencies concerning impacts on wetlands and fisheries. We think there’s something else going on.  Perhaps the project’s financial backers, a shapeless subsidiary of Goldman Sachs, got tired of wasting money.  Or perhaps Calais LNG recognized the significant weaknesses and impacts of the project as set forth in testimony by CLF and others. Regardless, the request for a delay and the granting of that request only favors the applicant, giving it more time to address flaws, and disfavors the citizens and organizations who were forced to meet the expedited schedule that Calais LNG so stridently sought.

A whale in Passamaquoddy Bay, the proposed site of the Calais LNG Facility.

Why is CLF opposed to building a LNG facility in Passamaquoddy Bay in the first place?  Well, to begin with, there is no need for a project of Calais LNG’s size anywhere in New England, and there is certainly no reason to put one in the pristine coastal area of Passamaquoddy Bay.  The annual increase in natural gas consumption in the Northeast region through the year 2035 across all energy use sectors is projected by the U.S. Energy Information Administration (EIA) to be under one percent. EIA estimates all natural gas needs can be met from the region’s existing LNG terminals, never mind the huge potential of domestic gas in the Northeast from tight shale formations.

But if there is so much natural gas in the area, then why does New England remain so dependent on heating oil as a fuel source?  The quick answer is that there is a lack of infrastructure for natural gas, especially in Maine, and that many users are hesitant to pay the upfront costs associated with switching to natural gas.  But despite promises by Calais LNG that its project will help to make this switch, this project will at best increase the supply of natural gas for a market already over-supplied.  It will do nothing to help Mainers switch from oil to natural gas to heat their homes, not even in Calais.

And while the energy benefits of building Calais LNG would be minimal, the environmental costs would be huge.  The proposed $1 billion project would include a 67-acre terminal site with two LNG storage tanks, a two acre pier, and a 20-mile natural gas pipeline connecting to the Maritimes&Northeast Pipeline. Although Calais LNG convinced the BEP to ignore the issue, if the project were built it would also require that a new pipeline run parallel to the existing M&NE pipeline, all 254 miles of it, with attendant impacts as well.  The construction and operation of the facility would result in the industrialization of Passamaquoddy Bay and would have permanent environmental impacts on the area’s wetlands, fisheries, wildlife and scenic character.

And since this is Maine…what about the lobstermen?  The development would significantly harm the area’s aquaculture, lobster, and fishing industries; three of the few viable industries left in Washington County.  Calais LNG will try to argue that they’ve come up with an ingenious solution to avoiding fishing impacts.  During the American lobster season, LNG carriers will only transit in Canadian waters, thereby avoiding any delays and gear loss.  Unfortunately for Calais LNG, Canada has continued to state, as recently as June, that they will not allow American LNG tankers in Canadian water.

So, while we are frustrated that the hearing has been delayed, we’re confident that Calais LNG will be just as bad of a proposal in the fall when the hearing is rescheduled as it is in the summer.

If nothing else, this week’s debacle should make the Board question the merits of deciding proposals of this magnitude on such a frenzied schedule.  This isn’t the first time the state has spent considerable resources on potential LNG projects only to have the applicants withdraw unannounced.  Two years ago, Downeast LNG, who plans to re-file this summer, withdrew their permit application right after a week-long BEP hearing.  As is often said, fool me once, shame on you.  Fool me twice, shame on me.

Learn more:
Read news coverage on the issue in the Portland Press Herald,  Bangor Daily News, and MPBN.net