LNG firm says regulators OK proposal

An Oklahoma City company that hopes to build a liquefied natural gas terminal on Passamaquoddy Bay announced Wednesday that its pre-filing application request has been approved by federal regulators.

In a prepared statement, Quoddy Bay LLC indicated that its preliminary proposal to build an LNG terminal with a daily capacity of 2 billion cubic feet of natural gas has been accepted by the Federal Energy Regulatory Commission. Public meetings and scoping sessions on the project, which is proposed for Passamaquoddy tribal land at Pleasant Point, are expected to be held in Washington County in early February, according to the press release.

It could takes years to get final FERC approval, agency officials have said.

An energy firm based in Washington, D.C., this past week also formally notified FERC of its intentions to build an LNG terminal in the nearby town of Robbinston.

Downeast LNG, which hopes to build an LNG terminal with a capacity of 500 million cubic feet of natural gas per day, filed a pre-application request with FERC on Jan. 5, according to Tamara Allen-Young, FERC’s spokeswoman for LNG projects.

“Anyone who wants to review it and comment on it [to FERC] now can do so,” she said Tuesday.

Dean Girdis, president of Downeast LNG, said Wednesday that his company’s filing initiates the permitting process for the project but that it still is too early for any technical review of the proposal to get under way. He said that FERC will oversee the selection of one of multiple environmental consulting firms recommended by Downeast LNG to evaluate the project. If the document formally is accepted by FERC, he said, the agency will schedule one or more public meetings on the proposal in Washington County.

“We hope to have acceptance within a couple of weeks,” Girdis said.

At current prices, a terminal with a capacity of 500 million cubic feet would be able to handle about $4 million of natural gas each day and roughly $1.5 billion of gas each year. A facility with a daily capacity of 2 billion cubic feet could handle $18.6 million of gas a day and $6.79 billion worth of gas each year.

The trading price for natural gas settled Wednesday at $9.238 per 1,000 cubic feet, a decrease from its all-time high price of $15.78 per 1,000 cubic feet on Dec. 13, according to The Associated Press.

Some residents on both sides of Passamaquoddy Bay, which is split between the U.S. and Canada, have organized to oppose any local LNG development, which they say would spoil the bay’s relatively pristine setting and threaten the quality of life in the area.

On Tuesday, however, Robbinston residents voted 227-83 in favor of the Downeast LNG proposal.

“I think it’s a reflection of support within the community,” Girdis said of the results of the nonbinding referendum.

Before the votes in the Robbinston referendum were tallied Tuesday, an Eastport resident who is a member of the anti-LNG group Save Passamaquoddy Bay said she was concerned that Downeast LNG filed with FERC before the vote was held. Linda Godfrey, coordinator for the group, said this demonstrated that contrary to its claims, Downeast LNG is not concerned about how much local support its proposal may have.

“They have acted in an irresponsible and noncaring way,” Godfrey said.

The group remains committed to working “at all levels to keep Passamaquoddy and Cobscook bays free from large, industrial development,” she added. Cobscook Bay is adjacent to Passamaquoddy Bay on the U.S. side of the border.

The major financial backer for the Downeast LNG project is Kestrel Energy Partners, LLC of New York, a private equity investment firm composed of Yorktown Energy Partners VI, L.P., former Meenan Oil Co. President Paul A. Vermylen Jr., and other investors. Kestrel Energy Partners has committed $7.5 million toward the initial stages of the Downeast LNG project.

Yorktown Energy Partners VI, L.P. is managed by Yorktown Partners LLC, a private New York investment firm with offices on Park Avenue, according to the official Web site of the New York Department of State. Yorktown Partners LLC also has investments in other energy concerns such as Hallador Petroleum Co. and Coalition Energy LLC, both of Denver, according to documents listed on the official Web site of the federal Securities and Exchange Commission.

Kestrel Energy Partners has a 20 percent stake in Coalition Energy, which “was formed to pursue coal interests,” according to a required annual report Hallador filed last year with the SEC.

A third firm, Calais LNG, also has publicized its intention to construct an LNG terminal on the U.S. side of the bay. Calais LNG hopes to construct a terminal with a daily capacity of 1 billion cubic feet at the Calais village of Red Beach but has yet to formally notify FERC of its intent.

Quoddy Bay LLC submitted its pre-application request to FERC last month but is facing legal challenges to its proposal. Several local members of the Passamaquoddy Tribe have filed a lawsuit against the federal Department of the Interior and its Bureau of Indian Affairs, claiming the bureau violated federal law last July when it approved a land lease agreement with the LNG developer.

Based on the ongoing lawsuit, Save Passamaquoddy Bay unsuccessfully appealed to FERC to deny Quoddy Bay’s pre-filing request.