The Economics
Overall Economic Advantages
The proposed $700 million LNG import terminal will have direct benefits, including land lease payments to the Passamaquoddy Tribe, property taxes in Perry and the rest of Washington County, hundreds of high paying jobs during the construction phase, and millions of dollars in payroll during the operation of the terminal. These benefits will have ripple effects that will be realized throughout the region and the state, leading to even more jobs and higher wages. Furthermore, the lower cost of energy in the region could help existing businesses lower their operating costs and make it easier to attract new businesses to the area.
Employment Overview
Quoddy Bay will begin construction in the fall of 2007. The construction phase will last a total of 36 months with most of the construction being completed in 24 months. However, the construction of the storage tanks will account for the extra 12 months of construction. Quoddy Bay will be holding a Job Fair in September (date t.b.a) to inform the public of the various jobs available both during and after construction. Additionally, Quoddy Bay by itself, and in cooperation with the state, will develop education and training programs to help more local men and women qualify for these high paying long-term permanent jobs. Both members and non-members of the Passamaquoddy Tribe will be offered vocational training to become long-term employees of the project. Further detail and information will be provided at the Quoddy Bay Job Fair in September.
Construction jobs and expenditures in the community
During construction, the project will provide the region with high level, high paying jobs. On the average, approximately 700 workers will be employed during the 36 month long construction process. While some jobs require laborers at an average wage, many of these jobs are highly skilled such as boilermakers, welders, and electricians, with wages far above the average.
The construction contractors will be required to demonstrate a preference for hiring workers in the immediate area surrounding the project.
The project will require the construction of a pier, various pipelines, foundations for buildings, the construction of buildings, and the construction three 160,000 cubic meter LNG storage tanks surrounded by reinforced concrete. Much of the construction equipment will be leased from local builders. The forms and cement will come from local builders.
Operational Jobs
Quoddy Bay expects to be operational by the winter heating season of 2009. The Import Terminal, Support Facility, and Storage Facility will require approximately 80-100 full-time employees in total during normal operations with average annual salaries of around $80,000. In total, onsite employment payroll equals approximately a $5.6 million increase to the region as a direct result of the proposed terminal. Given the relative sizes of the economies, employment of approximately 80 people at this wage, in Washington County is equal to an increase of approximately 900 jobs in Cumberland County. Quoddy Bay anticipates that many of these positions will be filled with local and regional workers. Training will be required for all positions, and thus approximately 90% of the operational employees could be local hires. These operational job numbers do not include the tug boat crews that will be necessary for the Quoddy Bay facility. Each of the 4 tugs that are expected to be operated regularly will require a 6 man crew. With the tug crews on call 24 hours a day, approximately 40 additional jobs will be created.
Direct Benefits to Tribe
During the two-year development phase of the project, Quoddy Bay LNG will pay the Tribe hundreds of thousands of dollars.
Upon start of operation, Quoddy Bay will pay the Passamaquoddy Tribe several million dollars per year, partly based on the amount of LNG that is imported to the proposed LNG import terminal. The Tribal Council at Pleasant Point will decide how to use the money for the long-term benefit of the Tribal members.
The contract is similar, in most respects, to the contract created for the Fairwinds LNG project in Harpswell, Maine. In addition to lease payments, Quoddy Bay will reimburse the Tribe for any expenses related to safety, or for other programs needed to support the project. Several million dollars per year can be used completely at the Tribe’s discretion—anything from environmental improvements, to educational opportunities, to the purchase of more tribal land.
Benefits to Perry
In February of 2007, the three town selectmen of Perry negotiated a financial framework agreement of $3.7 million in annual contributions, slated to begin in 2008.
In March of 2007, Perry voters will determine whether or not to accept the financial framework agreement during an annual town ballot.
The full agreeement as well as a summary of the agreements financial benefits are available in the document links below.
[download agreement summary here]
[download full agreement here]
Ripple Effects
While the direct benefits of the project impact the region to the tune of more than $15 million per year after construction, the ripple effects will be much greater.
As monies and income are distributed, the recipients of this money will turn and spend this money, creating a ripple effect and a money multiplier effect that will bring even more prosperity to the region. This effect will lead to the addition of many other new jobs, increased wages, and increases in personal disposable income.
The Maine State Planning Office uses computer models to simulate ripple effects of the direct economic benefits of proposed developments. After using the direct benefits of the Quoddy LNG Facility as in input into the Maine State Planning Office’s computer models, it was found that the Quoddy LNG Facility could support more than 1,000 jobs in the retail, services, wholesale, and construction trades during the operation of the facility in addition to the more than 70 jobs that will be available at the facility itself.
Indirect Benefits
The introduction of an LNG import terminal in Washington County does not only supply the area with high-paying jobs and additional funding, it will also supply the area with a low-cost, clean energy source. The low cost of Natural Gas to the area will help lower operating costs for commercial and industrial businesses throughout Washington County.
Low-cost energy may help keep some important businesses in Washington County operational, and provide a lower cost structure that would allow other businesses to enter into the economy. While the local communities will see the greatest direct benefit, the entire region and the state as a whole will benefit from further ripple effects and the tax revenue generated from these businesses.
[i] According to the Census Bureau, median income in Cumberland County multiplied by the current population is 13.521x (times) greater than the median income in Washington County multiplied by the current population in that county.
