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.

Still, natural gas is not benign. Significant environmental hazards can accompany the methods used to extract natural gas, including groundwater pollution from the practice of hydraulic fracturing and critical habitat destruction from drilling and extraction.

There are also negative environmental impacts associated with liquefied natural gas (“LNG”) terminals used to bring gas into the region. The risk of catastrophic explosion has mobilized communities across the region to fight terminals in their areas, especially urban areas of Rhode Island and Massachusetts. LNG project development also includes dredging, vessel and plant emissions, noise, and degradation of other natural and scenic resources, including fisheries, a prospect that has sparked appropriate alarm up and down the coast.

New England has one onshore LNG terminal, the Distrigas/GDF Suez Everett Marine Terminal, which has operated near Boston since 1971. Concerns about the impacts of such facilities have pushed many proposals for new development offshore. One offshore LNG terminal, the Northeast Gateway Deepwater Port, operates today, and a second, Neptune LNG, is under construction. Both are about 10 miles offshore from Gloucester, Massachusetts. Additionally, a Canadian LNG facility near Maine and expanded pipelines have boosted the region’s gas-import capacity.

Onshore LNG projects have been proposed on Passamaquoddy Bay in Maine: Downeast LNG in Robbinston and Calais LNG in Calais. Another project, Weaver’s Cove, would site a terminal in Mount Hope Bay and would require a damaging, disruptive cryogenic pipeline to carry the LNG to Fall River.

These proposals remain on the table even though the natural gas market in New England is already well supplied. The federal government estimates that all natural gas needs can be met from the region’s existing LNG terminals and gas pipelines, making the projects less attractive to investors.

CLF is opposed to building additional LNG facilities in New England. The energy benefits of these facilities would be minimal, while the environmental costs would be huge. While we need natural gas in the short term as a transitional fuel, it would be a tragic mistake to build large, expensive, industrial, long-lived infrastructure to facilitate long-term importation of a fossil fuel that is part of the climate change problem.

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.

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