Applications for LNG withdrawn

Quoddy Bay LNG is withdrawing its controversial applications for a liquefied natural gas facility on Passamaquoddy tribal land in Washington County.

In a letter to state regulators, Quoddy Bay officials said uncertainties in the international energy market meant the company would be unable to update the application by November, as they had hoped. As a result, Quoddy Bay is withdrawing the state applications for an import terminal and pipeline near Perry.

“We expect to re-file them in the near future, but are uncertain of the dates due to the world LNG supply and demand situation,” Donald Smith, president of the Oklahoma-based company, wrote to the chairman of the Maine Board of Environmental Protection.

While Quoddy Bay opponents said the withdrawal underscores their numerous critiques of the project, Smith said in an interview the delay doesn’t change the company’s long-term plans.

Smith said high prices for LNG and economic turmoil mean most supplies are going to facilities in Europe and the Far East, while domestic production of natural gas has increased in the U.S.

But Smith said an economic analysis predicts that supply will outstrip demand in New England by 2013 or 2014. Quoddy Bay hopes to refile its applications with the BEP and the Federal Energy Regulatory Commission in time to have a facility built by then, he said.

“So the economics of the project are still very favorable … but getting the plant built is not so urgent,” said Smith. “This doesn’t change our game plan at all.”

The decision to withdraw was largely expected.

Earlier this month, FERC notified Quoddy Bay that the agency was dismissing the application because of inadequate information.

Another company seeking authorization for an LNG facility along Passamaquoddy Bay in nearby Robbinston withdrew its state application last year after the BEP had already held more than a week of public hearings on the project.

Officials with Downeast LNG have said they also plan to refile applications.

Vera Francis, organizer of the Passamaquoddy group Nulankeyutomonen Nkihtahkomikumon, which means “We Take Care of Our Land,” called the withdrawal “an inevitable outcome to an otherwise impossible proposal.”

“Not believing in the strength and insight of those who value our coastal cultural heritage, and heartland, was what defeated his misguided purpose,” Francis said of Smith in a statement. “We wish him well, but do not want his fly-by-night operation in any form.”

Linda Godfrey with the group Save Passamaquoddy Bay said she believes the Quoddy Bay and Downeast LNG plans, as well as a third lesser-developed proposal for the region, were all doomed from the start.

There are no formal applications for LNG projects pending with the state.

The projects have been plagued by inappropriate locations, environmental and engineering challenges and opposition from some local residents as well as Canadian authorities who threatened to block tankers from passing through their waters, Godfrey said.