Tribe’s LNG lease studied Opponent says questions remain

PLEASANT POINT – Opponents of a proposed $200 million liquefied natural gas facility at Split Rock this week released copies of the 86-page land-lease agreement between the Passamaquoddy Tribe and the Oklahoma-based Quoddy Bay LLC.

Tribal attorney Craig Francis said he believes the tribe has entered into a good land-lease agreement. The agreement was signed May 19, and on June 1 it received the go-ahead from the federal Bureau of Indian Affairs.

Quoddy Bay hopes to build an LNG facility on tribal land by 2009, near Route 190.

The price to build the facility has dropped by half now that the developer is not going to build storage tanks.

But in a two-page analysis, LNG opponent Bob Godfrey of Eastport said he believes the lease agreement raises more questions than it answers.

Rather than building storage tanks at the 15-acre site, developers now plan a system that would convert the liquefied fuel back into a gas as soon as it is pumped off tankers docked at the terminal’s pier.

Immediately after being vaporized, the fuel would be routed via a pipeline connection to Baileyville, where it would feed into the Maritimes & Northeast Pipeline, eliminating the need to store any LNG at Pleasant Point.

Although company officials said Thursday there are no plans to build storage tanks, the lease agreement does allow for their construction on or off the reservation.

For months the company has said that the tribe would be paid $8 million annually for the life of the project, but the lease agreement says the fee will be adjusted based on the average annual daily throughput. The payment is expected to range anywhere from $6 million to $12 million annually.

Godfrey also questioned provisions within the contract that would allow Quoddy Bay to “configure” other tribal lands, including land on and off the reservation with the tribe’s approval.

Godfrey questioned whether that means land at Gleason’s Cove is back on the table. In March, Perry voters turned down a request to allow the tribe to build an LNG terminal on land it annexed from the town. Part of that land included Gleason’s Cove.

But Francis said that portion of the contract simply allows the tribe to use tribal land.

“To the extent that they need other areas for whatever facilities need to be constructed as part of this import LNG facility, then we will work with [the company] to try to find alternative space on the reservation,” Francis said.

“But what [opponents] probably didn’t understand was that the tribe … isn’t going to be displacing people and moving people to accommodate the facility.”

Although there is language within the lease agreement that deals with tribal sovereignty, Francis said the tribe has not given any away with this agreement.

“The extent that we can generate enough revenue we’ll probably expand and enhance the sovereignty we have,” he said.

“We will become a political player in the state more than what we are now and we know how that works. The paper companies have generally had a lot of pull in state government because they’ve had a lot of revenue, so hopefully we will accomplish that someday with this revenue.”

Some tribes have established a tax that is applied to contracts for projects performed on a reservation. Tribes may impose this tax on reservations, but they have no tax authority off reservations.

Francis said the tribe agreed to reduce its tax from 3 percent of the gross contract price to 1 percent, payable quarterly from the construction start date through completion of the project.

Godfrey questioned why the tribe was willing to accept less of such a tax during the construction phase of the project.

“We’ve never had anything this significant and the reduction wasn’t really all that significant in the overall context,” Francis said.