Who calls the shots? | In an otherwise conciliatory relationship, Maine and Canada duke out the rights to LNG passage
Rendering/Courtesy Downeast LNG
Downeast LNG has proposed a project in Robbinston that its founder expects will win FERC approval early next year
"I think it's likely Canada will continue to publicly oppose it until all the permits are secured," says Dean Girdis, founder of Downeast LNG
The topic of liquefied natural gas is heating up again, renewing a political feud between Maine and Canada that has turned the energy conversation from collaborative to competitive.
LNG was a headline-grabbing issue a few years ago, when LNG terminals were first proposed in the Down East region, but lately has taken a back burner to wind and tidal projects. Now it’s making news again as two of those proposals prepare for important next steps.
Developer Downeast LNG is nearing the end of the federal regulatory review for its proposed LNG terminal on Passamaquoddy Bay in Robbinston, and is preparing to file an application with the state Department of Environmental Protection. And developer Calais LNG, which is proposing a terminal on the St. Croix River in Calais, plans to file applications with federal and state regulators by the end of the year. Both developers hope to win approvals and start construction in 2011.
But Maine and Canadian officials are battling over whether tankers en route to LNG terminals in Maine can pass through Canadian waters. At the end of last month, Canadian Prime Minister Stephen Harper and Veterans Affairs Minister Greg Thompson reiterated Canada’s stance that it has a right to bar tankers from passing through their waters, the New Brunswick Telegraph-Journal reported.
But U.S. Sen. Susan Collins, in a commentary she wrote that appeared in VillageSoup, disagreed, saying the U.S. State Department confirmed that LNG tankers “enjoy a non-suspendable right of innocent passage into and out of Passamaquoddy Bay through Head Harbour Passage.” She called on Canada to offer its “good faith participation in the assessment of any port development proposals that could help meet New England’s energy needs and create jobs in Washington County.”
So far, both sides have refused to budge. As the political maelstrom continues to swirl, however, both Downeast LNG and Calais LNG say they will stay the course. “We’re certainly going to move forward, and we’re willing to talk,” says Dean Girdis, founder of Downeast LNG. “We’re confident we’ll be able to work to a solution with them as we get nearer to the end.”
Projects move forward
First proposed in 2004, the $400 million Downeast LNG project includes a 3,860-foot pier, two 160,000-cubic-meter LNG storage tanks and a 30-mile pipeline to transport gas to the Maritimes and Northeast Pipeline. Since 2005, the company has navigated the Federal Energy Regulatory Commission process, and this year FERC released a favorable review of the project in its draft environmental impact statement, in which the commission said the project’s environmental impact “would be reduced to less-than-significant levels” by following the commission’s mitigation measures.
The company expects FERC to release a final environmental impact study in a couple of months, and Girdis says he’s “pretty confident” the project will win FERC approval when the commission votes early next year. Near the end of this year, Downeast plans to file an application with the state Department of Environmental Protection.
About 10 miles away, rival developer Calais LNG is putting the final touches on its applications to FERC and the state, says Ian Emery, project founder and a state representative for eastern Maine. The project includes two 160,000-cubicmeter LNG storage tanks, a facility to truck natural gas and a 20-mile pipeline connecting to the Maritimes and Northeast Pipeline. The company filed its pre-application with FERC last year, and plans to submit its final application to FERC in November or December and file with the state this winter. Goldman Sachs is investing in the project and several paper mills have expressed interest in buying natural gas, Emery says.
While Girdis says the market will determine whether both projects will be built, Emery doubts more than one will ultimately be constructed. “The chances of two getting built are slim,” he says. But both developers agree that LNG projects would create hundreds of jobs and boost the economy of Maine’s poorest county. “Maine is in a position right now where we don’t have a lot of new opportunities on the horizon,” Emery says.
But not everyone wants to see LNG develop in Down East Maine. Canadian officials, including Veterans Minister Thompson and other conservatives, have voiced opposition to LNG projects since 2005, but the Canadian government didn’t formally announce its opposition until 2007, after the election of Prime Minister Harper and the government’s shift from a liberal to conservative leading party. After FERC’s favorable draft environmental review of the Downeast LNG project this May, New Brunswick Premier Shawn Graham sent a letter to FERC, saying passage of LNG tankers would threaten public safety, damage the environment and cause “potentially significant economic harm in a region of New Brunswick that is fundamentally dependent on the pristine ecosystem of the Passamaquoddy Bay region for its economic well-being.”
But the LNG developers and Maine officials, including Gov. John Baldacci, say Canada’s opposition to LNG development is more about politics than concern over safety and the environment. In a recent interview with the Telegraph-Journal, Baldacci took Canadian officials to task for not adhering to the federal regulatory process, saying opposition was based “more on emotions and local politics.” Both Girdis and Emery also suspect Canada, which recently constructed an LNG terminal in Saint John, N.B., called Canaport, is blocking LNG development in Maine to prevent competition. Canaport was developed by Irving Oil and Spanish company Repsol. “What’s behind it is some kind of protectionist effort,” Emery says. “It’s hard to say there isn’t.”
But Neal Burnham, consul for political and economic relations at the consulate general of Canada in Boston, denies that assertion. “There is a place for LNG,” he says. “We don’t support those projects for specific reasons, but we’re not against LNG development.”
Legal muddy waters
At issue is whether Canada has the legal right to bar LNG tankers from Head Harbour Passage. Burnham says the United Nations Convention on the Law of the Sea, or UNCLOS, as well as “historic maritime law” considers that passage “internal waters” to Canada, meaning Canada has a right to restrict access. Maine representatives argue, however, that Head Harbour Passage is considered territorial sea, through which, according to UNCLOS, a “right of innocent passage” exists. A 2007 study commissioned by Downeast LNG done by Ted McDorman, a law professor at the University of Victoria in British Columbia, supports the claim that innocent passage exists.
One sticking point: While the United States is a signatory to UNCLOS, it has not ratified the convention as Canada has, which irks some Canadian officials. “They’re using a provision in UNCLOS while at the same time not ratifying it,” Burnham says. He adds, though, that ratification would not change Canada’s position. “Basically, we’re at a stalemate,” says Burnham. “In terms of how this will be resolved, it remains to be seen.”
While UNCLOS does include a dispute resolution provision, Girdis at Downeast LNG doesn’t think it will come to that. “I think it’s likely Canada will continue to publicly oppose it until all the permits are secured,” he says.
Canada’s interest in the proposed energy corridor between Maine and New Brunswick could be what breaks the stalemate, the developers say. Already, Canada-based Irving Oil — now known as Fort Reliance — a stakeholder in the energy corridor, has publicly said it will not oppose LNG projects in Maine. As Maine and New Brunswick race to establish themselves as North American energy hubs, success likely depends on taking a regional approach. “We want to cooperate with them, we want to share in the opportunities,” Emery says. “We want the region to prosper as much as they do, so there’s no reason we can’t do it together.”
Burnham, too, is hopeful the LNG debate won’t overshadow the benefits that Maine and Canada share. “People tend to focus on the irritants, but that doesn’t tend to capture the true story, I find,” he says. “This is one dispute taking place against the economic background of a story that is a really positive one.”
Mindy Favreau, Mainebiz staff reporter, can be reached at mfavreau@mainebiz.biz.
Mainebiz web partners
Most Recent
Most Recent
Comments