June 13, 2005
On the rebound | Don Smith of Quoddy Bay LLC plans to build Maine's first LNG terminal
By Michaela Cavallaro
For Don Smith, inspiration struck at the Old Port Sea Grill. An Oklahoma businessman, Smith runs Quoddy Bay LLC, the company that hopes to develop a liquefied natural gas facility on Passamaquoddy land in Washington County. That plan hit a setback in late March, when residents of Perry, who have approval rights over development on some tribal lands, voted against the project.
A few weeks later, Smith was having dinner at the Portland restaurant with his son Brian, who is Quoddy Bay's project manager, and three lawyers from the tribe, who had earlier proposed an alternative site at Split Rock, which wouldn't need approval from anyone outside the tribe. The only problem was that the site is too small to house the tanks typically used to store LNG while it is warmed to ambient temperatures and converted back into natural gas. But, says Smith, "After the second or third bottle of wine, the lightbulb went off in my head."
What he came up with is a plan to slowly offload the cooled natural gas from tankers, then regasify it and pipe it directly into an existing pipeline. The only drawback, Smith says, is that it will take three days to offload the tankers, rather than the 12 hours needed for the traditional method. Still, Smith says, the costs work out about the same, since he'll be using the money he saves from not having to build storage tanks to pay the LNG tankers for the extra time they spend docked at Split Rock.
Though Smith's new plan won approval in a 4-3 vote by the Passamaquoddy Tribal Council in mid-May, it still faces a lengthy set of regulatory hurdles. (Smith expects to conduct engineering and environmental impact surveys over the next several months, with applications to be filed by the end of the year.) In addition to navigating the permitting process, though, Quoddy Bay must work to turn the tide of public opinion, which has steadfastly opposed construction of an LNG terminal every time one has been proposed in Maine.
In a phone conversation from his Oklahoma ranch, Smith admits that his company bears some responsibility for the reaction his plans have received. "We as Quoddy Bay Co. need to do a much better job," he says. "When [the project] was headed by previous people before my company and I took over, they focused on international issues of LNG supply and financing, working with the pipeline to get the gas through Maine, and they didn't focus on informing the community about LNG ˆ and that proved to be an error."
According to Smith, the opposition breaks down into three camps. One group is "against having industry in Washington County," he says, adding, "We will never convince them that this is a good idea." The second group, Smith says, is composed of individuals who are "looking for notoriety" and have latched onto LNG as a way to achieve it. The last group ˆ and the one that Quoddy Bay plans to address most directly ˆ is people he describes as "afraid of what they don't know." And, as Smith sees it, there are no concerns about LNG safety that can't be assuaged with education. That's why he's hoping to organize a series of public forums on the topic, with a professional facilitator and a lineup of experts from state government and elsewhere. (The Washington County Council of Governments is hosting its own forum on June 16 in Machias.)
In conversation, Smith repeatedly emphasizes what he sees as the main goal of the project: creating "financial security for the families in the tribe." But he also notes that developing an LNG terminal in Maine makes good business sense. "The LNG situation has a comparative economic advantage if it can locate in Maine," he says. "The place where natural gas is needed most and is least available is in southern New England ˆ there's a large economic base, they're huge users of energy and they don't have any natural gas available naturally."
A few weeks later, Smith was having dinner at the Portland restaurant with his son Brian, who is Quoddy Bay's project manager, and three lawyers from the tribe, who had earlier proposed an alternative site at Split Rock, which wouldn't need approval from anyone outside the tribe. The only problem was that the site is too small to house the tanks typically used to store LNG while it is warmed to ambient temperatures and converted back into natural gas. But, says Smith, "After the second or third bottle of wine, the lightbulb went off in my head."
What he came up with is a plan to slowly offload the cooled natural gas from tankers, then regasify it and pipe it directly into an existing pipeline. The only drawback, Smith says, is that it will take three days to offload the tankers, rather than the 12 hours needed for the traditional method. Still, Smith says, the costs work out about the same, since he'll be using the money he saves from not having to build storage tanks to pay the LNG tankers for the extra time they spend docked at Split Rock.
Though Smith's new plan won approval in a 4-3 vote by the Passamaquoddy Tribal Council in mid-May, it still faces a lengthy set of regulatory hurdles. (Smith expects to conduct engineering and environmental impact surveys over the next several months, with applications to be filed by the end of the year.) In addition to navigating the permitting process, though, Quoddy Bay must work to turn the tide of public opinion, which has steadfastly opposed construction of an LNG terminal every time one has been proposed in Maine.
In a phone conversation from his Oklahoma ranch, Smith admits that his company bears some responsibility for the reaction his plans have received. "We as Quoddy Bay Co. need to do a much better job," he says. "When [the project] was headed by previous people before my company and I took over, they focused on international issues of LNG supply and financing, working with the pipeline to get the gas through Maine, and they didn't focus on informing the community about LNG ˆ and that proved to be an error."
According to Smith, the opposition breaks down into three camps. One group is "against having industry in Washington County," he says, adding, "We will never convince them that this is a good idea." The second group, Smith says, is composed of individuals who are "looking for notoriety" and have latched onto LNG as a way to achieve it. The last group ˆ and the one that Quoddy Bay plans to address most directly ˆ is people he describes as "afraid of what they don't know." And, as Smith sees it, there are no concerns about LNG safety that can't be assuaged with education. That's why he's hoping to organize a series of public forums on the topic, with a professional facilitator and a lineup of experts from state government and elsewhere. (The Washington County Council of Governments is hosting its own forum on June 16 in Machias.)
In conversation, Smith repeatedly emphasizes what he sees as the main goal of the project: creating "financial security for the families in the tribe." But he also notes that developing an LNG terminal in Maine makes good business sense. "The LNG situation has a comparative economic advantage if it can locate in Maine," he says. "The place where natural gas is needed most and is least available is in southern New England ˆ there's a large economic base, they're huge users of energy and they don't have any natural gas available naturally."
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