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Calais LNG, Maine

STATUS:  In progress with opposition

TYPE: Natural Gas

OPPOSITION:  Environmental groups; local residents

PROSPECT:  Indeterminate

BACKGROUND:  Calais LNG has proposed to build a $1 billion liquefied natural gas (LNG) receiving terminal and storage facility on the outskirts of Calais, Maine.  The project will sit on a 330-acre site, featuring 2800 feet of shoreline along the St. Croix River and Passamaquoddy Bay.  The project consists of theterminal site, two LNG storage tanks, a two acre pier, and a 20-mile natural gas pipeline connecting to the Maritimes & Northeast Pipeline.

Over the past five years, Calais LNG has done significant public outreach, and has received support from the City of Calais, Town of Baileyville, Town of Cutler, Washington County Commissioners, the legislative delegation, Sunrise Economic Development Council, and the St. Croix River Valley Chamber of Commerce representing over 100 businesses in Maine and Canada.  However, several environmental groups and local residents—including the Conservation Law Foundation and the Save Passamaquoddy Bay Three Nation Alliance—fiercely oppose the project.  They argue that the environmental risks of the project outweigh its economic benefits, that the fishing community will be negatively impacted, and that future gas needs can be met through existing LNG terminals.

Calais LNG has been successful in obtaining several required approvals; however, it also appears to be grappling with financial, land ownership and permit-related challenges.  For instance, on April 10, 2008, the Calais City Council unanimously endorsed a resolution supporting the project.  On July 11, 2010, Calais LNG received its first set of permit approvals from the City of Calais.  However, a few days later Calais LNG asked the Maine Board of Environmental Protection (BEP) to postpone a long-anticipated hearing on the project.  Later that month it was revealed that the project’s lead financial backer, GS Power Holdings LLC, a Goldman Sachs subsidiary, was pulling out of the project.  Calais LNG told the Board that if GS Power Holdings couldn’t sell its ownership interest by Aug. 11, all permit applications would be withdrawn.  Calais LNG later requested an extension of this deadline, which it received.  It is not clear whether Calais LNG has found a replacement financial backer.

On September 21, 2010, The United States Coast Guard released Calais LNG’s Letter of Recommendation for the suitability of the waterway to the Calais LNG proposed terminal, approving the waterway as safe for LNG ship passage. 

The Calais LNG maintains site control for the project as contracts for only one of the land options has not been renewed with one of the landowners.  Calais LNG is working to secure the balance of the development funding to complete the permitting work and is in negotiations with an LNG supplier interested in committing 1 BCF per week of LNG in a long term contract to the Calais LNG facility.  These negotiations are continuing and they hope to have an agreement in place this spring that will allow them to continue with the FERC review and refile with the State of Maine DEP for permit approval.

According to Calais LNG, the project will have significant regional economic impacts as the project represents a $920 million investment for Maine and Washington County.  Calais LNG will create nearly 1,000 jobs through direct, indirect and induced impacts during peak construction of its terminal facility and pipeline.  Once constructed, Calais LNG will employ between 100-120 people, including 30-40 jobs for tug boat operators and their crews.  It is expected that approximately $30 million of construction materials and supplies will be purchased from local and regional businesses.  Total earnings related to the project will rise from approximately $5.9 million to a peak of nearly $25 million during construction and will provide an ongoing regional impact of approximately $12.6 million annually.

SOURCES:  Calais LNG:http://www.calaislng.com/; http://www.calaislng.com/our_project.aspx;
Kennebec Journal: http://www.kjonline.com/news/Calais-LNG-loses-financial-backer.html;
Portland Press-Herald: http://www.pressherald.com/news/State-agrees-to-delay-Calais-LNG-hearing.html;
Save Passamaquoddy Bay: http://www.savepassamaquoddybay.org/;
Conservation Law Foundation: http://www.clf.org/blog/climate-change/calais-lng-update-goldman-sachs-bows-out-of-project/;
Maine Public Broadcasting Network: http://www.mpbn.net/Home/tabid/36/ctl/ViewItem/mid/3478/ItemId/13003/Default.aspx

Last Updated:  November 22, 2010