The company that proposed a $1 billion liquefied natural gas terminal in Calais, Maine, put the project on hold Tuesday, two days before a scheduled showdown with state regulators.
In a letter to the Maine Board of Environmental Protection, Calais LNG said it is withdrawing its permit application because of "the meltdown of the financial markets."
"It is our firm belief that, but for the extreme turbulence of the capital markets, Maine would be well on its way toward having an LNG facility in Washington County," wrote Harold Ian Emery, one of the developers.
The board was preparing to consider a recommendation Thursday that the permit application be returned to the company.
Susan Lessard, the board's chairwoman, made the recommendation. She had granted three extensions to Calais LNG since July, when the company asked to postpone a long-awaited public hearing on its permit. In the interim, the company sought to resolve financial and technical issues, including the loss of a key investor and title to the site on the St. Croix River.
Tuesday's announcement was a blow to business interests that have tried to bring an LNG terminal to Maine. They say a terminal would help lower energy costs for paper mills and other industries.
"This is an unfortunate development," said Tony Buxton, a lawyer who represents several large industrial customers and was active in promoting Calais LNG.
Buxton expressed hope that the project can be revived when the financial markets are stronger and natural gas prices rebound. "It's difficult to get any energy project financed today," he said.
Calais LNG's proposal was one of three calling for terminals on Passamaquoddy Bay, on the Maine-New Brunswick border. The first application came from Quoddy Bay LNG, for a terminal at Pleasant Point. That application was dismissed by the Federal Energy Regulatory Commission.
Downeast LNG continues to make progress pursuing a federal environmental permit for a terminal in Robbinston. Downeast completed a hearing with the BEP three years ago, but after its pipeline route was rejected, the developer withdrew the board application. It plans another submission next year, after the federal review is complete.
Calais LNG proposed a gas delivery terminal on 330 acres along the St. Croix River, seven miles south of downtown Calais, with a 1,000-foot pier, two or three storage tanks and 20 miles of underground pipe connecting to the Maritimes & Northeast Pipeline.
The terminal would have the capacity to move 1 billion cubic feet of gas daily, and be served by one or two tankers a week, on average.
Opponents of liquefied natural gas in Passamaquoddy Bay say new gas sources elsewhere have reduced the need for a terminal in Maine. They also have raised concerns about the effects on coastal wetlands and fishermen, and potential hazards of large tankers navigating Passamaquoddy Bay and the St. Croix River.
Tankers also would have to pass through Canadian waters to reach the terminal. The Canadian government has said repeatedly that it won't allow ships carrying liquefied natural gas to transit its waters. The dispute remains unresolved.
Copyright (c) 2010, Portland Press Herald, Maine. Distributed by McClatchy-Tribune Information Services.