Wednesday, September 22, 2010

United States Coast Guard ignores Canadian rights in Internal waters.

US Coast Guard says Calais LNG site suitable for tanker traffic

Proposed Calais LNG Site. Tim Foulkes aerial
Washington (Platts)--22Sep2010/342 pm EDT/1942 GMT

The US Coast Guard has determined that waterways near the proposed Calais
LNG import terminal in Maine are suitable for LNG tanker traffic, the agency
said in a lengthy analysis sent to the US Federal Energy Regulatory

The "letter of recommendation" dated Tuesday is a key hurdle for the
company hoping to build a 1 Bcf/d facility with three storage tanks on the St.
Croix River and Passamaquoddy Bay.

The project faces opposition from the Canadian province of New Brunswick,
which asked FERC in February to reject the application because of waterway
safety concerns and promised to block LNG tankers from Canadian waters of the
Head Harbour Passage en route to the terminal. The province also opposes the
Downeast LNG project proposed for Robbinston, Maine.

Art Gelber, development manager of Calais LNG, said Tuesday that the
Coast Guard finding should dismiss New Brunswick's challenge.

"From our point of view, the way the Coast Guard handled this, they were
respectful of the Canadians but they essentially said, 'This is an American
port. We have the right of innocent passage. Those ships can come through the
waterway,'" Gelber said.

In an 88-page report, the agency validated the project's "waterway
suitability assessment" after consultation with the company, the Port for
Northern New England, community groups, and state and local emergency

"We are pleased with the cooperation of our port partners who have
provided their candor and expertise to the review process," James McPherson,
Coast Guard Captain of the Port, said in a statement. "We will continue to
work with the community and our fellow emergency responders to ensure that
appropriate measures are taken to assure the safety and security of the port
and surrounding communities."

The approval comes after a string of bad news for the project. In July,
managing member GS Power Holdings, a subsidiary of Goldman Sachs Group,
announced it wanted to sell its interest.

The developer has since asked the Maine Board of Environmental Protection
to delay considering its application while it attempts to salvage the deal.
The state said last week that it would give Calais LNG until December 1 to
sort out the financing for the estimated $900 million to $1 billion project.

Gelber said the company is in talks with two potential investors.

--Meghan Gordon,

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