October 3, 2005
Terminal velocity | Three liquefied natural gas terminals are proposed in Washington County. But will even one of them ever get built?
By Sean Donahue
A few years ago, most Mainers didn't pay much attention to liquefied natural gas. Now, there are three proposals to build LNG terminals along a 15-mile stretch of coastline on Passamaquoddy Bay, and Mainers increasingly are being drawn into a debate centered on such hard-to-resolve topics as national energy policy, environmental and safety issues and what constitutes the right economic development strategy for one of Maine's poorest counties.
Those proposals, however, may remain just that. So far, Maine voters have twice rejected LNG projects, first in March 2004 in Harpswell and then a year later in Perry, where residents rejected a plan by the Passamaquoddy Tribe to bring LNG to Pleasant Point. "New England is tough. You've got a congested coastline, lots of mixed-use and definite preferences on use, and people really don't understand LNG terminals there," says Michelle Michot Foss, head of the Center for Energy Economics at the University of Texas in Austin. "It's not like the Gulf Coast, where people are familiar with these projects and tend to want the business."
So what's keeping would-be LNG developers interested in Maine ˆ as well as other Northeast states, where at least five projects have recently been proposed? For starters, the chance to fill a growing gap between gas demand and supply in the region. New England gas users, including homeowners, businesses and power plants, are expected to consume more gas than the region's existing pipeline and storage infrastructure can handle sometime between 2006 and 2012, according to a 2005 report by the New England Governors' Conference.
Meanwhile, natural gas usage is projected to surge nationwide. By 2025, the U.S. Department of Energy's Energy Information Administration predicts the country's natural gas consumption will reach 30.7 trillion cubic feet annually, a 40% increase from 2003 consumption. And LNG is expected to fill much of that demand: The EIA projects LNG imports will grow from about a trillion cubic feet this year to 6.4 trillion cubic feet by 2025.
Sensing a potential market, developers focused on the Maine coast, and Washington County in particular, as an ideal location for potential LNG sites. That interest springs from political factors, such as Gov. John Baldacci's statements in support of LNG development in Maine; technical factors, such as proximity to the Maritimes & Northeast Pipeline; demographic factors like relatively low population density; and natural factors, such as access to deep water. "There's not a lot of land or deep water ports in southern New England compared to Maine," says Dean Girdis, founder of Downeast LNG, which has proposed building an LNG terminal in Robbinston.
But many of those factors are precisely the features that make any LNG project wrong for Washington County, according to opponents. "We think one LNG terminal was a terrible idea. Two is a nightmare. Three becomes a farce," says Nancy Asante, a spokeswoman for Save Passamaquoddy Bay, a group opposing the LNG developments.
Save Passamaquoddy Bay sees LNG as a potentially devastating intrusion of industry on a region that's traditionally depended on its natural resources. Opponents worry about the projects' potential effects on the fishing industry and tourism ˆ not to mention environmental and safety concerns associated with potential gas leaks and spills from tankers and storage facilities.
Those concerns, as well as questions about the projects' promises of economic impact, will undoubtedly be part of the long and technically challenging permitting process, which can take up to two years and cost between $8 million and $10 million, according to developers. But the final authority to grant permission to build an LNG terminal in Maine sits with the Federal Energy Regulatory Commission.
Because the FERC process is dictated by the National Environmental Policy Act, the commission's criteria for approving or rejecting an LNG terminal centers on a project's environmental and safety features, says spokesman Bryan Lee. And although the commissioners do look at the potential economic impact of projects, Lee says it's not FERC's job to choose one particular project over another ˆ adding that FERC approval does not mean a terminal will actually be built. "The commission is obligated under the Natural Gas Act [of 1938] to evaluate applications before it," says Lee. "The markets will determine which of these facilities ultimately get built."
Because of those market factors, LNG industry experts don't expect the Maine coast to bristle with gas terminals anytime soon ˆ despite the apparent rush to build LNG terminals in Maine. For starters, recently approved LNG projects in the Gulf Coast and planned expansions of existing LNG terminals should provide enough gas to meet the country's growing demand, according to Foss. "I doubt the market could sustain three or four projects [in Maine], and even though it looks scary from the community side, there's a very low probability that you'd even get one," she says.
But Maine's LNG developers are betting that if they can get a project approved, they'll be able to stake out a competitive niche in the New England market: offering lower-priced gas thanks to lower transmission costs compared with Canadian or Gulf Coast terminals. And each developer is confident that its project offers unique features that will help it find both local support and federal approval.
To understand those differences, Mainebiz decided to talk to each developer and find out who's behind these proposals, the details of their projects and what they think their chances are for creating an operational LNG terminal in Maine.
Quoddy Bay LLC
Principals: Don Smith and Brian Smith, Smith Cogeneration Management; the Passamaquoddy Tribe at Pleasant Point
Location: Split Rock, Pleasant Point
Project: 0.5 bcfd - 2 bcfd (billion cubic feet/daily) LNG import facility, with storage tank facility potentially located at a second site nearby
Estimated construction cost: $400 million to $500 million
Projected economic impact: $6 million - $16 million annual lease payment to the Passamaquoddy Tribe; 80 full-time jobs when operational, $6 million in annual payroll
Website: www.quoddylng.com
Quoddy Bay's formation in June 2004 made it the first of the current crop of developers to announce plans for an LNG terminal on Passamaquoddy Bay. But the company's original proposal to develop a two-tank LNG terminal and electricity cogeneration facility on tribal land at Gleason Cove was rejected in March of this year by the abutting town of Perry, forcing the company to change the design and location of its proposed facility significantly.
The project remains a partnership between the Passamaquoddy Tribe at Pleasant Point and executives from Smith Cogeneration Management, a Tulsa, Okla.-based energy infrastructure developer. The Passamaquoddies chose Smith Cogeneration as a development partner last spring after sending inquiries throughout the energy industry about bringing LNG to Pleasant Point.
Despite its energy heritage, however, Smith Cogeneration is new to LNG. The company's primary expertise is developing cogeneration facilities ˆ large plants that use natural gas to generate electricity, and then use the waste heat to help power an industrial facility such as a paper mill or tire factory. But since such developments involve site selection, complex permitting processes and the need to line up gas suppliers and end users, Quoddy Bay project manager Brian Smith believes his company is prepared for the challenge of LNG development. "There are a lot of similar players in both areas, and it's the management of those players and your ability to bring those players together that makes a development," Smith says. "That makes us believe these are similar businesses."
Following the defeat of their original plan, Quoddy Bay and the Passamaquoddies came back with a second LNG proposal at Split Rock. Although the 15-acre site would allow for what Smith calls an "LNG import facility," where tankers could dock and offload their LNG, it presents an unusual engineering challenge: "There isn't room for LNG storage tanks," he says.
That means that Quoddy Bay must build an import facility where the LNG is slowly pumped from ships, regassified and transmitted directly into a pipeline ˆ causing the ships to stay at dock for three to six days, instead of 12 to 18 hours to simply offload LNG into tanks where it can be kept in its liquid state. But the company hasn't given up on storage tanks. It's proposing to build a storage facility at a second site near Split Rock, and has already discussed such a facility in Robbinston that would be connected to the Split Rock site by a new pipeline. Smith says the company also is looking at other potential sites for storage tanks. "We are confident that an LNG storage facility will exist," Smith says. "To a certain degree, that location will depend on local communities ˆ which one wants it more."
Despite Split Rock's size limitations, Smith believes it offers the best location among the Washington County sites currently proposed by developers. Its location at the southern end of Passamaquoddy Bay means that tankers would not have to travel as close to the St. Croix River estuary as they would to reach other proposed LNG terminals, where Smith says the water becomes shallower and concerns about environmental impacts may be stronger. Likewise, ships serving a Split Rock facility would stay farther away from the Canadian shoreline, potentially defusing some of the opposition from residents of New Brunswick ˆ including the province's premier, Bernard Lord, who's concerned about the impact of a Maine LNG terminal on tourism in the resort town of St. Andrews.
In exchange for the rights to develop a facility, Quoddy Bay is promising the most direct benefits to the Passamaquoddies of Pleasant Point ˆ an annual lease payment of between $6 million and $16 million, depending on the volume of gas moving though the terminal. For surrounding communities, which won't see direct property tax revenues unless Quoddy Bay builds a separate storage facility, the company is touting the potential to create on average 400 jobs a year during the two-year construction period. Once operational, the facility will need 80 to 100 full-time employees, says Smith, providing the area with up to $6 million in payroll.
Like every developer with a proposal in Washington County, Quoddy Bay faces opposition from nearby residents and organizations such as Save Passamaquoddy Bay. But in an attempt to make up ground from the Perry defeat this spring, the company has convened a citizens advisory panel to help it address residents' concerns. Meanwhile, it is pushing ahead with the raft of studies and surveys it must complete before it can begin the FERC permitting process.
In early September, the company completed a safety and navigation study of the proposed terminal that Smith says found no major navigational hazards or other safety issues that would preclude developing the site. Following completion of that report, Quoddy Bay applied to the Maine Bureau of Parks and Lands for a submerged land-lease for the proposed terminal's pier ˆ the first of dozens of permits a facility would need.
Smith hopes to begin the FERC permitting process by the end of this year, with a goal of starting construction in 2007. And even as he touts the company's momentum in the process, he maintains that he's not concerned about the prospects of any other LNG terminals in the area. "We don't feel we're in competition with Downeast LNG or with any proposal in Passamaquoddy Bay," says Smith. "We've done a lot of work to get where we are today and are ready to move forward quickly with FERC permitting."
Downeast LNG
Principals: Dean Girdis, Robert Wyatt, Kestrel Energy Partners
Location: Mill Cove, Robbinston
Project: 0.5 bcfd terminal with one or two storage tanks
Estimated construction cost: $400 million
Projected economic impact: 240 jobs during the three-year construction phase; 56 full-time jobs once operational, $9 million in payroll; $3 million - $5 million annually in local, county and state tax payments; $500,000 annual economic development payment to Washington County
Website: www.downeastlng.com
The last LNG terminal built anywhere in North America was the EcoElectrica facility in Puerto Rico in 1998. And Rob Wyatt, the engineer who led that facility's permitting and development process, is now working with Downeast LNG to bring a terminal to Robbinston.
It's a story that Downeast LNG founder Dean Girdis likes to tell to illustrate his company's background in the LNG market. Girdis is also an energy development veteran, having worked both in the Peace Corps and for the World Bank to develop pipelines, power plants and LNG terminals in places like Africa and China. Most recently, he worked as an LNG industry analyst for Washington, D.C.-based PFC Energy, helping big energy companies analyze gas supply and demand issues and stake out competitive strategies.
Through that work, Girdis says he became aware of the looming shortage of gas supply in the Northeast, while at the same time watching proposed LNG terminals such as the Fairwinds project in Harpswell fail in the face of community opposition. Girdis felt he could do better. "I was thinking we could help meet the region's demand for energy while promoting economic development," he says. "I thought it could be an interesting opportunity."
Before choosing Robbinston, Downeast LNG studied 27 potential sites across New England, ranking them on criteria that included both marine conditions (waves, currents, channel depth) and land conditions (wetlands, species habitat, population density). When that ranking was complete, Robbinston emerged as the best potential facility, says Girdis, and the company in June purchased an option on 80 acres of land near Mill Cove. There, Downeast LNG hopes to build a one- or two-tank LNG terminal capable of handling 500 million cubic feet of LNG a day.
Once operational, a terminal that size ˆ considered small in comparison to proposed Gulf Coast facilities that would handle one-billion- to two-billion-cubic-feet of gas a day ˆ would deliver about $26 million in new economic activity to Washington County, according to Downeast LNG. Those figures include about 50 full-time jobs, $17 million in local expenditures, and $3 million-$5 million in annual tax payments. In addition, Girdis says Downeast LNG would contribute $500,000 a year to a Washington County economic development trust fund, to help neighboring towns pursue new business opportunities and launch job training programs.
Although similar economic projections are part of every LNG developer's pitch to a potential host community, Girdis says he wants to guarantee those benefits to Robbinston and Washington County. "We'll make these commitments legally binding, either by writing them in as conditions of our FERC permit or in a contract with the community," says Girdis. (FERC spokesman Bryan Lee said that the commission would address issues that a developer brings before it, but that "the commission does not typically provide for those sorts of economic incentives as part of its authorization process.")
Residents of Robbinston will likely have the chance to vote on Downeast LNG's proposal, but Robbinston town officials could not be reached for comment. But Girdis' campaign has already received a boost from the Sunrise County Economic Development Council, which in August wrote a letter of support for Downeast LNG's proposal after studying it and listening to presentations from both Downeast LNG and Save Passamaquoddy Bay. Through that process, the council decided the project would offer economic benefits to Washington County without causing undue harm to the environment or to existing industries like fishing or tourism, "I would hope people understand that we look very carefully at each and every project," says Dianne Tilton, executive director of Sunrise County Economic Development Council. "We're not automatically supporting LNG development."
Even as it is still working to gauge local support in Robbinston, Girdis says the company already has started many of the environmental studies required for the FERC application process. Until the company enters the formal permitting process, however, Girdis says he won't begin negotiating with potential LNG suppliers. But he says the company already has been negotiating with a potential end-user for the terminal's gas, which he declines to name.
But if Downeast LNG can navigate the long and contentious permitting process, Girdis says he believes his and Wyatt's industry experience will give their project an edge over other proposals. "We have the financial backing. We know the industry, we know the suppliers and we know LNG permitting," says Girdis. "The other guys can't say that."
BP Consulting
Principals: Fred Moore, Ian Emery; the Passamaquoddy Tribe at Indian Township
Location: Red Beach, Calais
Project: To be determined
Estimated construction cost: To be determined
Projected economic impact: To be determined, but principals envision providing inexpensive gas to nearby institutions such as hospitals and schools in addition to tax revenues and job creation
Website: none
Fred Moore admits that he is no expert in LNG. But he's been involved with potential LNG projects in Washington County for as long as anyone has. As the Passamaquoddy Tribe's representative to the state Legislature, Moore was involved with initial discussions that resulted in the Quoddy Bay partnership.
Moore's involvement with that project ended after the tribe's August 2004 vote to approve it. Now, though, Moore is developing a new proposal with the Passamaquoddy Tribe at Indian Township to bring an LNG terminal to Red Beach in Calais. (Pleasant Point and Indian Township are separate political subdivisions of the Passamaquoddy Tribe.) That project, he said, would correct what he sees as shortcomings in the Quoddy Bay agreement, such as allowing for Indian ownership of the facility rather than just leasing the land to a private entity. "I sought to unify the tribe behind one project in partnership with a host community that understood the value of the project and the value of partnering with the tribe," said Moore.
Moore says he began looking for alternative LNG sites early this year, but that he accelerated his process after Perry voters derailed Quoddy Bay's original plan to develop LNG at Gleason Cove. "I thought that Pleasant Point project was finished," Moore says.
He quickly focused on Calais, he says, in part because of the town's track record of good relations with the tribe and also what he saw as the suitability of the location near Red Beach. He then began studying charts and topographical maps, as well as population density figures that told him, in general, that the location might be suitable for a terminal. "I dragged scallops throughout the area, so I'm somewhat familiar with shoreline and the bottom," says Moore. "My instinct immediately told me that this could be done. I just had to do some due diligence."
In June, he went to the government of Indian Township to propose a facility partially owned by the tribe, and then began securing options on 360 acres of land near Red Beach. Moore later brought in a partner, Rep. Ian Emery (R-Cutler), to form BP Consulting, and only then approached the city of Calais about the plan.
The idea, he says, was not to go to the city with a fully developed proposal and a set offer of economic incentives. Instead, he wanted to ask for the city's support in pursuing a project, while still giving it the chance to negotiate for certain incentives and conditions once a developer is found.
For that reason, Moore can provide few details on BP Consulting's LNG terminal. He also says he hasn't started any of the environmental studies needed before a developer can begin the FERC permitting process. But he says that the Indian Township government has heard from more than one financial institution (he declines to name them) that would be willing to provide financing for the project.
Still, Moore says he's already begun discussions with potential partners who would handle the actual development of the facility, and says he doesn't think his lack of energy experience will limit BP Consulting's chances of pulling together a team for the project.
Analysts such as Michelle Michot Foss aren't so sure, though, saying that lack of connections with the energy industry can be a huge hurdle. "An inexperienced developer is not going to get very far in this business," says Foss.
But Moore seems unfazed by the challenge, saying that he intended all along to pursue a different kind of LNG development. "This is not yet another LNG plan as far as we're concerned, where a developer comes in, gets a terminal approved and the gas goes south and money goes somewhere else," says Moore. "We're trying to develop a plant that keeps as much of those things at the disposal of local residents as possible."
Those proposals, however, may remain just that. So far, Maine voters have twice rejected LNG projects, first in March 2004 in Harpswell and then a year later in Perry, where residents rejected a plan by the Passamaquoddy Tribe to bring LNG to Pleasant Point. "New England is tough. You've got a congested coastline, lots of mixed-use and definite preferences on use, and people really don't understand LNG terminals there," says Michelle Michot Foss, head of the Center for Energy Economics at the University of Texas in Austin. "It's not like the Gulf Coast, where people are familiar with these projects and tend to want the business."
So what's keeping would-be LNG developers interested in Maine ˆ as well as other Northeast states, where at least five projects have recently been proposed? For starters, the chance to fill a growing gap between gas demand and supply in the region. New England gas users, including homeowners, businesses and power plants, are expected to consume more gas than the region's existing pipeline and storage infrastructure can handle sometime between 2006 and 2012, according to a 2005 report by the New England Governors' Conference.
Meanwhile, natural gas usage is projected to surge nationwide. By 2025, the U.S. Department of Energy's Energy Information Administration predicts the country's natural gas consumption will reach 30.7 trillion cubic feet annually, a 40% increase from 2003 consumption. And LNG is expected to fill much of that demand: The EIA projects LNG imports will grow from about a trillion cubic feet this year to 6.4 trillion cubic feet by 2025.
Sensing a potential market, developers focused on the Maine coast, and Washington County in particular, as an ideal location for potential LNG sites. That interest springs from political factors, such as Gov. John Baldacci's statements in support of LNG development in Maine; technical factors, such as proximity to the Maritimes & Northeast Pipeline; demographic factors like relatively low population density; and natural factors, such as access to deep water. "There's not a lot of land or deep water ports in southern New England compared to Maine," says Dean Girdis, founder of Downeast LNG, which has proposed building an LNG terminal in Robbinston.
But many of those factors are precisely the features that make any LNG project wrong for Washington County, according to opponents. "We think one LNG terminal was a terrible idea. Two is a nightmare. Three becomes a farce," says Nancy Asante, a spokeswoman for Save Passamaquoddy Bay, a group opposing the LNG developments.
Save Passamaquoddy Bay sees LNG as a potentially devastating intrusion of industry on a region that's traditionally depended on its natural resources. Opponents worry about the projects' potential effects on the fishing industry and tourism ˆ not to mention environmental and safety concerns associated with potential gas leaks and spills from tankers and storage facilities.
Those concerns, as well as questions about the projects' promises of economic impact, will undoubtedly be part of the long and technically challenging permitting process, which can take up to two years and cost between $8 million and $10 million, according to developers. But the final authority to grant permission to build an LNG terminal in Maine sits with the Federal Energy Regulatory Commission.
Because the FERC process is dictated by the National Environmental Policy Act, the commission's criteria for approving or rejecting an LNG terminal centers on a project's environmental and safety features, says spokesman Bryan Lee. And although the commissioners do look at the potential economic impact of projects, Lee says it's not FERC's job to choose one particular project over another ˆ adding that FERC approval does not mean a terminal will actually be built. "The commission is obligated under the Natural Gas Act [of 1938] to evaluate applications before it," says Lee. "The markets will determine which of these facilities ultimately get built."
Because of those market factors, LNG industry experts don't expect the Maine coast to bristle with gas terminals anytime soon ˆ despite the apparent rush to build LNG terminals in Maine. For starters, recently approved LNG projects in the Gulf Coast and planned expansions of existing LNG terminals should provide enough gas to meet the country's growing demand, according to Foss. "I doubt the market could sustain three or four projects [in Maine], and even though it looks scary from the community side, there's a very low probability that you'd even get one," she says.
But Maine's LNG developers are betting that if they can get a project approved, they'll be able to stake out a competitive niche in the New England market: offering lower-priced gas thanks to lower transmission costs compared with Canadian or Gulf Coast terminals. And each developer is confident that its project offers unique features that will help it find both local support and federal approval.
To understand those differences, Mainebiz decided to talk to each developer and find out who's behind these proposals, the details of their projects and what they think their chances are for creating an operational LNG terminal in Maine.
Quoddy Bay LLC
Principals: Don Smith and Brian Smith, Smith Cogeneration Management; the Passamaquoddy Tribe at Pleasant Point
Location: Split Rock, Pleasant Point
Project: 0.5 bcfd - 2 bcfd (billion cubic feet/daily) LNG import facility, with storage tank facility potentially located at a second site nearby
Estimated construction cost: $400 million to $500 million
Projected economic impact: $6 million - $16 million annual lease payment to the Passamaquoddy Tribe; 80 full-time jobs when operational, $6 million in annual payroll
Website: www.quoddylng.com
Quoddy Bay's formation in June 2004 made it the first of the current crop of developers to announce plans for an LNG terminal on Passamaquoddy Bay. But the company's original proposal to develop a two-tank LNG terminal and electricity cogeneration facility on tribal land at Gleason Cove was rejected in March of this year by the abutting town of Perry, forcing the company to change the design and location of its proposed facility significantly.
The project remains a partnership between the Passamaquoddy Tribe at Pleasant Point and executives from Smith Cogeneration Management, a Tulsa, Okla.-based energy infrastructure developer. The Passamaquoddies chose Smith Cogeneration as a development partner last spring after sending inquiries throughout the energy industry about bringing LNG to Pleasant Point.
Despite its energy heritage, however, Smith Cogeneration is new to LNG. The company's primary expertise is developing cogeneration facilities ˆ large plants that use natural gas to generate electricity, and then use the waste heat to help power an industrial facility such as a paper mill or tire factory. But since such developments involve site selection, complex permitting processes and the need to line up gas suppliers and end users, Quoddy Bay project manager Brian Smith believes his company is prepared for the challenge of LNG development. "There are a lot of similar players in both areas, and it's the management of those players and your ability to bring those players together that makes a development," Smith says. "That makes us believe these are similar businesses."
Following the defeat of their original plan, Quoddy Bay and the Passamaquoddies came back with a second LNG proposal at Split Rock. Although the 15-acre site would allow for what Smith calls an "LNG import facility," where tankers could dock and offload their LNG, it presents an unusual engineering challenge: "There isn't room for LNG storage tanks," he says.
That means that Quoddy Bay must build an import facility where the LNG is slowly pumped from ships, regassified and transmitted directly into a pipeline ˆ causing the ships to stay at dock for three to six days, instead of 12 to 18 hours to simply offload LNG into tanks where it can be kept in its liquid state. But the company hasn't given up on storage tanks. It's proposing to build a storage facility at a second site near Split Rock, and has already discussed such a facility in Robbinston that would be connected to the Split Rock site by a new pipeline. Smith says the company also is looking at other potential sites for storage tanks. "We are confident that an LNG storage facility will exist," Smith says. "To a certain degree, that location will depend on local communities ˆ which one wants it more."
Despite Split Rock's size limitations, Smith believes it offers the best location among the Washington County sites currently proposed by developers. Its location at the southern end of Passamaquoddy Bay means that tankers would not have to travel as close to the St. Croix River estuary as they would to reach other proposed LNG terminals, where Smith says the water becomes shallower and concerns about environmental impacts may be stronger. Likewise, ships serving a Split Rock facility would stay farther away from the Canadian shoreline, potentially defusing some of the opposition from residents of New Brunswick ˆ including the province's premier, Bernard Lord, who's concerned about the impact of a Maine LNG terminal on tourism in the resort town of St. Andrews.
In exchange for the rights to develop a facility, Quoddy Bay is promising the most direct benefits to the Passamaquoddies of Pleasant Point ˆ an annual lease payment of between $6 million and $16 million, depending on the volume of gas moving though the terminal. For surrounding communities, which won't see direct property tax revenues unless Quoddy Bay builds a separate storage facility, the company is touting the potential to create on average 400 jobs a year during the two-year construction period. Once operational, the facility will need 80 to 100 full-time employees, says Smith, providing the area with up to $6 million in payroll.
Like every developer with a proposal in Washington County, Quoddy Bay faces opposition from nearby residents and organizations such as Save Passamaquoddy Bay. But in an attempt to make up ground from the Perry defeat this spring, the company has convened a citizens advisory panel to help it address residents' concerns. Meanwhile, it is pushing ahead with the raft of studies and surveys it must complete before it can begin the FERC permitting process.
In early September, the company completed a safety and navigation study of the proposed terminal that Smith says found no major navigational hazards or other safety issues that would preclude developing the site. Following completion of that report, Quoddy Bay applied to the Maine Bureau of Parks and Lands for a submerged land-lease for the proposed terminal's pier ˆ the first of dozens of permits a facility would need.
Smith hopes to begin the FERC permitting process by the end of this year, with a goal of starting construction in 2007. And even as he touts the company's momentum in the process, he maintains that he's not concerned about the prospects of any other LNG terminals in the area. "We don't feel we're in competition with Downeast LNG or with any proposal in Passamaquoddy Bay," says Smith. "We've done a lot of work to get where we are today and are ready to move forward quickly with FERC permitting."
Downeast LNG
Principals: Dean Girdis, Robert Wyatt, Kestrel Energy Partners
Location: Mill Cove, Robbinston
Project: 0.5 bcfd terminal with one or two storage tanks
Estimated construction cost: $400 million
Projected economic impact: 240 jobs during the three-year construction phase; 56 full-time jobs once operational, $9 million in payroll; $3 million - $5 million annually in local, county and state tax payments; $500,000 annual economic development payment to Washington County
Website: www.downeastlng.com
The last LNG terminal built anywhere in North America was the EcoElectrica facility in Puerto Rico in 1998. And Rob Wyatt, the engineer who led that facility's permitting and development process, is now working with Downeast LNG to bring a terminal to Robbinston.
It's a story that Downeast LNG founder Dean Girdis likes to tell to illustrate his company's background in the LNG market. Girdis is also an energy development veteran, having worked both in the Peace Corps and for the World Bank to develop pipelines, power plants and LNG terminals in places like Africa and China. Most recently, he worked as an LNG industry analyst for Washington, D.C.-based PFC Energy, helping big energy companies analyze gas supply and demand issues and stake out competitive strategies.
Through that work, Girdis says he became aware of the looming shortage of gas supply in the Northeast, while at the same time watching proposed LNG terminals such as the Fairwinds project in Harpswell fail in the face of community opposition. Girdis felt he could do better. "I was thinking we could help meet the region's demand for energy while promoting economic development," he says. "I thought it could be an interesting opportunity."
Before choosing Robbinston, Downeast LNG studied 27 potential sites across New England, ranking them on criteria that included both marine conditions (waves, currents, channel depth) and land conditions (wetlands, species habitat, population density). When that ranking was complete, Robbinston emerged as the best potential facility, says Girdis, and the company in June purchased an option on 80 acres of land near Mill Cove. There, Downeast LNG hopes to build a one- or two-tank LNG terminal capable of handling 500 million cubic feet of LNG a day.
Once operational, a terminal that size ˆ considered small in comparison to proposed Gulf Coast facilities that would handle one-billion- to two-billion-cubic-feet of gas a day ˆ would deliver about $26 million in new economic activity to Washington County, according to Downeast LNG. Those figures include about 50 full-time jobs, $17 million in local expenditures, and $3 million-$5 million in annual tax payments. In addition, Girdis says Downeast LNG would contribute $500,000 a year to a Washington County economic development trust fund, to help neighboring towns pursue new business opportunities and launch job training programs.
Although similar economic projections are part of every LNG developer's pitch to a potential host community, Girdis says he wants to guarantee those benefits to Robbinston and Washington County. "We'll make these commitments legally binding, either by writing them in as conditions of our FERC permit or in a contract with the community," says Girdis. (FERC spokesman Bryan Lee said that the commission would address issues that a developer brings before it, but that "the commission does not typically provide for those sorts of economic incentives as part of its authorization process.")
Residents of Robbinston will likely have the chance to vote on Downeast LNG's proposal, but Robbinston town officials could not be reached for comment. But Girdis' campaign has already received a boost from the Sunrise County Economic Development Council, which in August wrote a letter of support for Downeast LNG's proposal after studying it and listening to presentations from both Downeast LNG and Save Passamaquoddy Bay. Through that process, the council decided the project would offer economic benefits to Washington County without causing undue harm to the environment or to existing industries like fishing or tourism, "I would hope people understand that we look very carefully at each and every project," says Dianne Tilton, executive director of Sunrise County Economic Development Council. "We're not automatically supporting LNG development."
Even as it is still working to gauge local support in Robbinston, Girdis says the company already has started many of the environmental studies required for the FERC application process. Until the company enters the formal permitting process, however, Girdis says he won't begin negotiating with potential LNG suppliers. But he says the company already has been negotiating with a potential end-user for the terminal's gas, which he declines to name.
But if Downeast LNG can navigate the long and contentious permitting process, Girdis says he believes his and Wyatt's industry experience will give their project an edge over other proposals. "We have the financial backing. We know the industry, we know the suppliers and we know LNG permitting," says Girdis. "The other guys can't say that."
BP Consulting
Principals: Fred Moore, Ian Emery; the Passamaquoddy Tribe at Indian Township
Location: Red Beach, Calais
Project: To be determined
Estimated construction cost: To be determined
Projected economic impact: To be determined, but principals envision providing inexpensive gas to nearby institutions such as hospitals and schools in addition to tax revenues and job creation
Website: none
Fred Moore admits that he is no expert in LNG. But he's been involved with potential LNG projects in Washington County for as long as anyone has. As the Passamaquoddy Tribe's representative to the state Legislature, Moore was involved with initial discussions that resulted in the Quoddy Bay partnership.
Moore's involvement with that project ended after the tribe's August 2004 vote to approve it. Now, though, Moore is developing a new proposal with the Passamaquoddy Tribe at Indian Township to bring an LNG terminal to Red Beach in Calais. (Pleasant Point and Indian Township are separate political subdivisions of the Passamaquoddy Tribe.) That project, he said, would correct what he sees as shortcomings in the Quoddy Bay agreement, such as allowing for Indian ownership of the facility rather than just leasing the land to a private entity. "I sought to unify the tribe behind one project in partnership with a host community that understood the value of the project and the value of partnering with the tribe," said Moore.
Moore says he began looking for alternative LNG sites early this year, but that he accelerated his process after Perry voters derailed Quoddy Bay's original plan to develop LNG at Gleason Cove. "I thought that Pleasant Point project was finished," Moore says.
He quickly focused on Calais, he says, in part because of the town's track record of good relations with the tribe and also what he saw as the suitability of the location near Red Beach. He then began studying charts and topographical maps, as well as population density figures that told him, in general, that the location might be suitable for a terminal. "I dragged scallops throughout the area, so I'm somewhat familiar with shoreline and the bottom," says Moore. "My instinct immediately told me that this could be done. I just had to do some due diligence."
In June, he went to the government of Indian Township to propose a facility partially owned by the tribe, and then began securing options on 360 acres of land near Red Beach. Moore later brought in a partner, Rep. Ian Emery (R-Cutler), to form BP Consulting, and only then approached the city of Calais about the plan.
The idea, he says, was not to go to the city with a fully developed proposal and a set offer of economic incentives. Instead, he wanted to ask for the city's support in pursuing a project, while still giving it the chance to negotiate for certain incentives and conditions once a developer is found.
For that reason, Moore can provide few details on BP Consulting's LNG terminal. He also says he hasn't started any of the environmental studies needed before a developer can begin the FERC permitting process. But he says that the Indian Township government has heard from more than one financial institution (he declines to name them) that would be willing to provide financing for the project.
Still, Moore says he's already begun discussions with potential partners who would handle the actual development of the facility, and says he doesn't think his lack of energy experience will limit BP Consulting's chances of pulling together a team for the project.
Analysts such as Michelle Michot Foss aren't so sure, though, saying that lack of connections with the energy industry can be a huge hurdle. "An inexperienced developer is not going to get very far in this business," says Foss.
But Moore seems unfazed by the challenge, saying that he intended all along to pursue a different kind of LNG development. "This is not yet another LNG plan as far as we're concerned, where a developer comes in, gets a terminal approved and the gas goes south and money goes somewhere else," says Moore. "We're trying to develop a plant that keeps as much of those things at the disposal of local residents as possible."
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