Like any other developers, those who would bring liquefied natural gas terminals to Down East Maine likely would list three factors they consider when looking for a place to build.

Location, location, location.

There are several reasons LNG developers have set their sights on the western shore of Passamaquoddy Bay in Washington County, according to people connected or familiar with the industry.

. Much of the county’s coastline is within 40 miles of an underused pipeline that runs from Nova Scotia to southern New England through Baileyville.

. It is closer than other U.S. ports to international shipping lanes by which LNG would be imported.

. It has deep-water access needed for large ships to come in close to shore.

. It is relatively close to the major East Coast market where the lucrative fuel would be put to use generating heat and electricity for tens of millions of people.

“The closer to the market you can get, the better,” Jim Lewis, an LNG consultant with ICF Consulting in Houston, said recently.

There are now three known proposals for building LNG terminals in Washington County, none of which has yet been submitted formally to federal regulators. Calais LNG hopes to build a terminal at Red Beach in Calais; Downeast LNG is eyeing Mill Cove in adjacent Robbinston; and Quoddy Bay LLC intends to build a terminal at Split Rock, a site on Passamaquoddy tribal land at Pleasant Point, and to store LNG in either Perry or Robbinston.

The projects’ potential economic impact on the region have not been determined, but developers have said the terminals could create hundreds of jobs and generate tens of millions of dollars in Maine in long-term wages and benefits.

By all accounts, the value of the gas that could pass through Maine likely would be significant. At current natural gas prices, which are roughly twice as high as they were a year ago, each proposed terminal on Passamaquoddy Bay would have the capacity to handle more than $1 billion worth of natural gas each year.

How Washington County’s possible role in the global LNG infrastructure compares with other factors such as safety, demand, economic benefit and regional compatibility could take years to determine as the initial proposals take shape and come under official review, according to LNG experts.

Population

The reasons Passamaquoddy Bay is attractive to LNG terminal developers may conflict with what others like about Maine’s easternmost county. The scenic rural nature of Washington County, which has a population density of only 13 residents per square mile, is incentive for some residents to stay and a draw for others from out of state, despite the county’s reputation of having few jobs.

Opponents to LNG terminal development in Washington County, some of them organized into groups on both sides of the U.S-Canadian border, have argued that Passamaquoddy Bay should be spared from industrial development. The bay, most of which lies in Canadian waters, should be left in its relatively pristine state, they have said, in order to cultivate a regional economy based on tourism and natural resources.

The county’s low population density, however, is appealing to developers, some of whom recently have faced strong local opposition to building LNG terminals in southern New England, according to Uldis Vanags of Maine’s State Planning Office. Vanags, an energy policy analyst for the state agency, said Wednesday that it is easier and cheaper for LNG terminal operators to develop emergency response plans for rural areas than it is for them to do so for more populated regions.

Earlier this year, the Federal Energy Regulatory Commission, the primary arbiter for proposed onshore terminals, rejected an application to convert an LNG storage facility in Providence, R.I., into a shipping terminal but approved a plan to build a new terminal in Fall River, Mass.

Local opposition groups and elected officials from the Fall River area have said safety concerns about LNG and the population density of southern Massachusetts are among the reasons they are fighting FERC’s approval of the project. Boston officials, concerned about the safety and security of LNG tanker traffic that passes through the local harbor on its way to and from a terminal in nearby Everett, Mass., have asked federal officials to table an application to extend a new pipeline from the facility. Boston officials want assurances that the new pipeline would not lead to increased LNG tanker traffic through Boston Harbor.

According to Tamara Young-Allen, FERC’s spokeswoman for LNG matters, the commission rejected the plan to convert the Providence storage facility into a tanker terminal because the project would not have brought the facility up to modern safety standards.

Because of increased demand for LNG, there are 13 onshore proposals nationwide formally being considered by FERC and eight offshore proposals being considered by the U.S. Department of Transportation and the Coast Guard. In Canada, two new terminals have been approved and are being built in Saint John, New Brunswick, and at Point Tupper, Nova Scotia.

Formally proposed LNG projects in the northeastern U.S. include expansion of an existing terminal in Cove Point, Md., a proposed new facility in Long Island Sound, another in Logan Township, N.J., and two more that would be offshore from Boston.

Economics

Developers hoping to build terminals in Washington County have said an LNG terminal, which costs roughly half a billion dollars to build, would help Maine’s economy by creating hundreds of well-paying jobs. These predictions are supported by a University of Maine study that was commissioned by Downeast LNG, the developer hoping to build a terminal in Robbinston.

The study, released last week by UM, indicates that the proposed Downeast LNG facility would generate almost 190 permanent jobs in Washington County, more than 1,000 jobs statewide during the construction phase, and tens of millions of dollars in long-term wages and benefits to Maine. Members of Save Passamaquoddy Bay, a group that opposes development of LNG terminals on the bay, have questioned the accuracy and objectivity of the study, which was funded by the developer.

All three developers have said publicly that there are too many undetermined variables to predict the size of their eventual profit margins, such as what the demand for natural gas might be in five years. But based on information from government sources, current commodities price listings and people knowledgeable about the industry, the value of LNG that could pass through at least two of the terminals each year, for each facility, could be close to $2 billion. The third, if it were operating today, could handle more than $3 billion worth of gas each year.

Vanags said that the commodities price listing for natural gas on Wednesday was roughly $13.50 per million British thermal units, or Btu. He said this price was $2.40 more than it had been the previous week and more than twice the December 2004 price of $6.03 per million Btu.

One Btu is the energy needed to raise the temperature of 1 pound of water 1 degree Fahrenheit. Approximately 820,000 Btu is the equivalent of 1,000 cubic feet of natural gas, according to Vanags.

According to the federal Energy Information Administration, part of the Department of Energy, the average 2005 price for a thousand cubic feet of natural gas is projected to be $8.88.

FERC’s Web site indicates that the proposed Downeast LNG and Quoddy Bay LLC terminals each could have a daily capacity of 500 million cubic feet of gas. Fred Moore, a tribal state representative and a partner with Calais LNG, said Thursday that the proposed Red Beach facility would have a capacity of 1 billion cubic feet of gas per day.

According to figures supplied by Vanags and the federal agencies, the proposed Downeast LNG and Quoddy Bay LLC terminals each could be capable of handling about $5 million worth of natural gas every day, or $1.8 billion worth of natural gas each year, if they were operating at today’s prices. The Calais LNG terminal, which Moore said would be owned by the Passamaquoddy Tribe, could handle roughly $10 million of gas each day or $3.65 billion of gas each year.

“No matter what you look at, it is a tremendous amount of money,” Moore said. “It completely overshadows anything the tribe’s ever been involved in.”

Dean Girdis, president of Downeast LNG, agreed Thursday that if it were operating today, his company’s terminal could handle approximately $5 million worth of gas daily.

He indicated, however, that there are many variables that determine how much a terminal operator would keep in profit. Typically, the operator simply would be processing natural gas owned by someone else and would receive only a fee as its revenue, he said.

“The terminal owner never owns the gas, in many cases,” Girdis said. “The way the contracts work, it’s the big [suppliers] who control and capture [profits].”

Demand

According to a FERC publication called “A Guide to LNG – What All Citizens Should Know,” the U.S. Energy Information Administration has estimated that national demand for natural gas in the next 20 years will increase 38 percent.

Young-Allen said the shrinking supply of the natural gas reserves in North America has led to a heightened interest nationwide in LNG imports, most of which now come from the Caribbean island nation of Trinidad and Tobago.

“Canadian exports to the U.S. are dwindling,” she said. “There’s a need for Northeastern gas.”

According to Richard Hill, a retired engineering professor at University of Maine who has taught and written extensively on energy issues, the supply of natural gas for generating electricity has been outpaced by demand. The use of natural gas for energy has increased in recent years as public acceptance of nuclear power has declined, he said recently. With natural gas supplies constrained by recent hurricane damage along the Gulf Coast, he said, there could be power shortages this winter.

“The fact that we got nervous about nuclear power is the boat we’re in now,” Hill said. “It may be that if we have a spate of cold weather, we could have rolling blackouts.”

The Maritimes & Northeast Pipeline was constructed through Maine and New Brunswick six years ago in hopes that it could connect the urban centers of New England with natural gas reserves off Sable Island, east of Nova Scotia, according to Hill. Those deposits, however, proved to be smaller than some energy companies had hoped, prompting interest in finding alternative means for bringing natural gas to the region.

Lewis, the LNG consultant in Houston, said LNG imports are expected to increase from Russia and the Persian Gulf nation of Qatar, which have large underground deposits of natural gas.

“Those reserves are very, very large and inexpensive to find and produce,” Lewis said.

The expenses of liquefaction and transportation have discouraged the development of LNG import terminals, according to Lewis, but now that natural gas costs have increased, it has made importation of LNG a more financially viable enterprise. It has been roughly 25 years since any new LNG import terminal was built in the U.S., he said.

As more import terminals are constructed, it should help increase natural gas supplies in the U.S., which in turn should help reduce the fuel’s cost, he said.

“I believe we’re going to see the natural gas price coming downward,” he said. “The demand doesn’t look like it’s going to decrease in the near future.”

Safety

What kind of danger the presence of such large quantities of the fuel might pose to residents has been a major issue cited by LNG opponents in Washington County and other areas. Developers acknowledge they will have to go to great lengths to minimize the susceptibility of their facilities and operations to accidents or possible terrorist attacks.

When natural gas is shipped in liquid form, it is 600 times more dense than the vapor, which makes it easier to transport in large quantities. To maintain natural gas as a liquid, it must be chilled to minus 260 degrees Fahrenheit.

The safety record of LNG tankers and terminals, according to LNG experts, is impeccable.

“I don’t think it’s dangerous at all,” Hill said.

Hill said that if LNG were spilled at sea, it would pool on the surface of the water and then evaporate to a density lighter than air, causing the flammable gas to rise and disperse quickly into the atmosphere.

Lewis said that since LNG tanker traffic started in the early 1960s, there have been more than 45,000 loaded voyages of LNG transports. During that time, there never has been an incident in which LNG has leaked from a tanker ship and led to an accident or explosion, he said.

“The perception that LNG is dangerous is a false perception,” Lewis said.

According to FERC’s guide about LNG, natural gas in its liquid form is not flammable. In vapor form, it must be mixed at a certain concentration with air to ignite, otherwise it is too diluted or is not mixed with enough oxygen to sustain flame. If LNG evaporates in a confined or enclosed space, however, the concentration of the gas may be enough to make it explosive, according to the publication.

There have been two explosions at LNG terminals in the United States over the past 61 years, the guide indicated. In each case, the explosion was the result of flammable natural gas vapors becoming trapped in confined spaces – a risk, Lewis said, shared by all types of combustible fuels.

An LNG tank made from metal with low nickel content cracked in Cleveland, Ohio, in October 1944 after the extremely low temperatures of its contents – natural gas chilled to the required temperature – made the tank wall brittle. Because no system was in place for catching a spill, the liquid ran into the street and into the storm sewer system, where it evaporated. A subsequent explosion and fire killed 128 people, according to the federal guide.

Any new LNG storage facility now is required to have a spill containment system larger than its storage capacity.

In 1979, a pump seal failed at an LNG facility in Lusby, Md., funneling gas vapors through an electrical conduit into a confined space. When a worker at the terminal flipped a circuit breaker switch, the gas ignited, killing one person and causing extensive damage to a building, the guide indicated.

In recognition of the potential hazards, FERC requires gas-dispersion and thermal exclusion zones surrounding every LNG terminal storage facility in order to minimize the threat to the public of an explosion or fire, according to the document.

The guide can be downloaded from FERC’s Web site or can be obtained free of charge by calling (866) 208-3372, according to Young-Allen.

Fishermen on Deer Island, New Brunswick, such as these at the Leonardville wharf are concerned that an LNG facility would affect the health of ocean stocks and that the timing of tankers carrying natural gas would interfere with pulling up their lobster traps. The tankers, which require security boats and large clearance areas, would come from the Bay of Fundy through Head Harbor and Western passages into Passamaquoddy Bay.

“This is not an industrial area,” said Steven Smith, an artist who owns a shop in St. Andrews, New Brunswick. He is not in favor of an LNG facility in Passamaquoddy Bay. St. Andrews, which some refer to as the Bar Harbor to the north, is a seacoast town at the tip of a peninsula that juts into the bay and is visible from Maine.

Art Mackay, executive director of the St. Croix Estuary Project, stands at the water’s edge in St. Andrews, New Brunswick, recently. Robbinston is visible across the water, and St. Croix Island International Historic Site (not pictured) is to Mackay’s left. He is opposed to an LNG facility on social and environmental grounds.