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Quoddy Bay LNG Receives FERC Letter Postponing Action

(April 28, 2008)In a letter dated April 25, 2008, the Federal Energy Regulatory Commission (“FERC”) notified Quoddy Bay LNG that progress on its application is on hold until further information is received from the company. FERC says that it will reinitiate the evaluation of the Quoddy Bay application once Quoddy Bay supplies additional information to the Commission staff.

Donald Smith, Quoddy Bay President says, “The FERC letter accurately describes the present situation. Data supporting our application measures over six feet wide on our shelves and represents two years of engineering, environmental and safety studies. We are working to answer detailed questions on a few aspects of the project for FERC.”

The FERC letter notes that Quoddy Bay has not submitted information that has been requested in the past. When asked about the that information Smith went on to note the following,

“In addition to responding to FERC, we also are working on other financial and environmental aspects of the project regarding our sources of LNG. LNG from some suppliers has a higher Btu content than others. In order to reach US pipeline standards for natural gas we can either buy LNG with a higher Btu content and then add inert nitrogen, or we can buy LNG that when regasified already meets U.S. pipeline standards.”

Btus, or British thermal units, is a standard that is used to measure the heat content of natural gas. When it comes out of the ground from various wells around the world, natural gas is essentially the same, but does have some variation in its heat content due to the presence of other gases.

“We haven’t decided whether to build the electric generation and the nitrogen plant because we haven’t finalized LNG supply. If we can avoid those components we can lower the cost of the facility by tens of millions of dollars and reduce the air emissions as well,” said Smith.

Adam Wilson, Quoddy Bay’s deputy project manager, continues, “We’ve been patient to study the LNG supply question carefully so that we build the best possible project in terms of environmental impact and the long term security of LNG supply.”

Wilson went on to say that the company will answer the FERC’s questions in the near future. According to the letter from FERC, Quoddy Bay’s submittal of requested information will result in the review process resuming.

Quoddy Bay LNG Submits Report Regarding Canadian Participation to FERC and Coast Guard


(August 16, 2007) Washington, D.C. – Quoddy Bay LNG, the Oklahoma-based developer proposing to construct an LNG import and storage facility at Pleasant Point and in Perry, Maine, submitted a filing today to the Federal Energy Regulatory Commission (FERC). The filing is in response to a recent data request issued by FERC which was inspired by a letter from recently retired U.S. Coast Guard Captain Stephen Garrity.

In Garrity’s June letter, he stated the Coast Guard would need “certain information to fully assess the maritime safety, security, and environmental impact in order to complete a Water Suitability Report.” That report is critical in the permitting effort for a LNG developer.

According to Quoddy Bay Project Manager Brian Smith, most of the missing information that the Coast Guard and FERC are seeking pertains to how operations will be conducted given the government of Canada’s current opposition to LNG tankers transiting Canadian waters to reach U.S. ports.

“We recognize the unique situation we are in, and that’s why we’ve spent months finding the most practicable solution,” said Smith. “The report we submitted should cover everything FERC and the Coast Guard are looking for, and most importantly, it demonstrates that operations can legally and safely proceed with or without Canadian participation in this process.”

Absent from the official data request from FERC was the request from the original USCG letter that indicated the company should seek out and obtain the purported Canadian report the serves as the basis for the government’s position.

“We believe that FERC recognizes Quoddy Bay LNG as a private company,” stated Smith. “We cannot negotiate with a foreign nation, and such a responsibility should be left in the hands of the State Department and the White House.”

Canada first stated over a year ago that a report would be produced to substantiate their position. Despite further promises coming from Ottawa to the State Department earlier this year, no such report has been released.

Smith’s first hope is that Canada will participate in the process, as that would lead to the best results for all parties.

“However, Canada’s continued lack of participation will not stop this project from moving forward,” said Smith.

Due to the discussion of extensive safety and security protocols in Quoddy Bay’s response to the data request, much of it will remain undisclosed for security reasons. However, once the USCG releases a Waterway Suitability Report, many of the recommendations of how operations will be conducted in the waterway will be revealed.

Quoddy Bay currently has an application before FERC and the state of Maine. The company expects to receive all permits in early 2008 and begin operations in 2010.

 


 

Quoddy Bay LNG Files State of Maine Permit Applications

Perry, ME. (June 11, 2007) – Quoddy Bay LNG announced today that it has filed applications for a host of state permits for the development and construction of its liquefied natural gas (LNG) facility that will be located on the Pleasant Point Reservation and in the Town of Perry, Maine.  Quoddy Bay is proposing to construct a facility with a throughput capacity of 2 billion cubic feet of natural gas per day that will serve the New England market beginning in 2010.

“We have been working very hard incorporating new environmentally friendly technologies and mitigation strategies to improve our proposal and ensure that we provide comprehensive applications,” said Project Manager, Brian Smith.  “This is a big step in the development of the project, and we look forward to a thorough and transparent review process,” Smith continued.

Quoddy Bay held two public informational meetings to inform the public in advance of today’s filings describing the various applications and the facility’s expected impacts.  In those meetings Quoddy Bay stated that today the Maine Department of Environmental Protection would receive Quoddy Bay’s application for a Site Location of Development Act permit, Natural Resources Protection Act permit, an Air Emissions License, and a Waste Discharge permit.  Later this week, Quoddy Bay will also submit an application for a Submerged Lands Lease that will be required for the infrastructure located in coastal waters. 

These applications focus primarily upon the project’s expected impacts to the environment.  Typically, issues related to the project’s safety, security, tanker transit logistics, and socioeconomics remain within the purview of the Federal Energy Regulatory Commission.  Quoddy Bay has an application pending with the FERC, and explained that the content of that application addressed those issues.  For purposes of the Maine DEP, the company reiterated that they believe they met all standards required for the permits.

“Quoddy Bay and our consultants have worked very hard to reduce the environmental impact of our project because we understand and appreciate the growing need to protect the environment from unreasonable and irresponsible impacts,” explained Smith. “Not only have we proposed mitigation strategies to compensate for our impacts, but we have also incorporated the most advanced vaporization technology available to reduce our air emissions while revaporizing the LNG,” said Smith.

Last week, Quoddy Bay and its lead engineering consultant Black & Veatch, announced that the Quoddy Bay facility will utilize Fired Heater Vaporizers to transform the LNG back into its gaseous form.  These FHVs, a new innovation developed solely by Black & Veatch, emit far less pollutants into the air during vaporization than the standard Submerged Combustion Vaporizers (SCVs) that are currently used in all other LNG import facilities. 

“Our facility will be the most advanced import facility in the world, and we are extremely pleased that the seventy-five percent reduction in emissions has allowed us to apply as a Minor Source in our Air Emissions License,” explained Smith.  “We feel that the FHVs are a good example of Quoddy Bay’s commitment to corporate responsibility for environmental protection, and we think that the public and the DEP will see that the same commitment from Quoddy Bay in the rest of our applications,” concluded Smith.

Quoddy Bay expects its FERC permit as well as the state permits to be in place by the first quarter of 2008.  The facility is expected to begin operations in mid 2010.

 


 

Black & Veatch Makes Breakthrough on LNG Vaporization

Quoddy Bay LNG to Use New Environmentally Friendly Vaporization Technology

Perry, ME. (June 4, 2007) – Quoddy Bay LNG announced today a new development in its 2 billion cubic-feet-per- day liquefied natural gas (LNG) import facility to be located in Washington County, Maine. Quoddy Bay’s lead engineering company, Black & Veatch, a global engineering, consulting and construction company, has developed a new patent-pending vaporization technology for the facility that will reduce the pollution causing air emissions by approximately 75 percent.

“This technology will result in the Quoddy Bay facility being the most advanced and environmentally friendly onshore LNG import facility in the world,” said Donald M. Smith, President of Quoddy Bay LNG. “We are extremely proud of the accomplishments of Black & Veatch because as the energy industry changes, there is an increasing need to protect the environment and develop green technologies. That is why Quoddy Bay took the extra time to incorporate this new technology during development so that we can be leaders in an ever expanding industry.”

The advance in technology is in the manner in which the LNG is vaporized before sending into natural gas pipelines. According to Black & Veatch, the new technology will reduce emissions at the facility, including CO and NOX, using fired heater with ultra low NOX burners in conjunction with condensing waste heat recovery units to reheat the super-cooled LNG back to a gas so that it can be sent into pipelines.

“Our approach is to deliver a reliable, environmentally sound solution to this complex challenge and at the same time help our client improve communities and lives in the region,” said John Murphy, Project Director for Black & Veatch.

At 2 billion cubic feet per day, Quoddy Bay is proposing the facility due to the growing demand for natural gas and the benefits of economies of scale. “The project will enjoy even greater benefits with four times the vaporization capacity of several smaller .5 bcf facilities that are proposed around North America, but yet we have no greater emissions into the air,” said Brian Smith, Project Manager for Quoddy Bay.

The east coast of the United States has three facilities in operation, but there are many more proposed especially in New England. Most facilities are about one-fourth to one-third the size of the Quoddy Bay facility in terms of natural gas send out capacity. This new technology could conceivably allow one large facility like Quoddy Bay’s to be built in the place of three to four smaller ones and yet have the air emissions impact of only one.

“While natural gas is a clean alternative to several fuels, our family of companies is constantly looking for alternative energy sources that are better for the environment,” said Smith. “In the meantime, we must do everything possible to use our current energy sources as efficiently as possible, and Quoddy Bay in conjunction with the extraordinary work of Black & Veatch has taken a major step in this effort.”

Quoddy Bay submitted its FERC application in December of 2006 and will be filing for its state and other major permits the second week of June. Quoddy Bay expects to begin operations in early 2010.

About Black & Veatch
Black & Veatch is a leading global engineering, consulting and construction company specializing in infrastructure development in energy, water, telecommunications, management consulting, federal and environmental markets. Founded in 1915, Black & Veatch develops tailored infrastructure solutions that meet clients’ needs and provide sustainable benefits. Solutions are provided from the broad line of service expertise available within Black & Veatch, including conceptual and preliminary engineering services, engineering design, procurement, construction, financial management, asset management, program management, construction management, environmental, security design and consulting, management consulting and infrastructure planning. With more than $2 billion in revenue, the employee-owned company has more than 100 offices worldwide and has completed projects in more than 100 countries on six continents.

About Quoddy Bay LNG

Editor’s Note: Quoddy Bay LNG, L.L.C. is an independent energy company based in Oklahoma, formed to develop an LNG import terminal in Washington County, Maine, and owned by individuals and companies both in Maine and in Oklahoma. The company was established in response to inquiries from representatives of the Passamaquoddy Tribe about the potential of locating an LNG import terminal at Pleasant Point.

 


Perry Voters Accept $3.6 Million Annual Payments from Quoddy Bay LNG
March 26 , 2007

Deal includes $100,000 annually for Perry scholarship fund and an additional one time $1 million donation for school renovation

Voters in Perry showed their support for an agreement negotiated by their Selectmen and officials of Quoddy Bay LNG which stabilizes revenues from the company for the first 25 years of the proposed LNG import facility’s operation. In a ballot referendum, Perry voters accepted the Financial Framework Agreement with Quoddy Bay LNG that will provide annual payments, guarantees and other amenities to the town that amount to more than twice the town’s current annual budget. The Perry community also showed their support for their selectmen by reelecting Dick Adams, one of the three selectmen who negotiated the Financial Framework Agreement, and by voting down an initiative to form a Special Negotiating Committee that would have negotiated in place of the selectmen.

“This entire area will benefit enormously from the Quoddy Bay project, but we are very happy that the Town of Perry seized a great opportunity today,” said Brian Smith, Quoddy Bay LNG Project Manager. “The Perry community has made it clear that it understands and embraces all of the opportunities associated with the Project by accepting this agreement. We look forward to bringing these important financial benefits to the town in the near future,” Smith continued.

The agreement includes a one time payment of $1,000,000 for renovation of the Perry Elementary School. In addition to the $1,000,000 donation to the school, Quoddy Bay will donate $100,000 per year to a scholarship fund for Perry school children. “Our goal is to become a part of this community and invest in its future, and the best way to do that is to insure children get the best education possible,” said Perry resident and Quoddy Bay Community Relations Director Andrea Barstow. “For so many in our community, the thought of funding our kids’ secondary education is daunting - a seemingly impossible goal. This scholarship fund could help a lot of students realize their dreams of going to college,” Barstow continued.

Question 3, rejected by the Perry community today, aimed to form a “Special Negotiating Committee” that would have worked with Quoddy Bay in the future. Dick Adams, one of the three selectmen who negotiated the agreement, was reelected today as well.

“It appears that the voters have put their confidence in the Perry Selectmen who have done a great job in negotiating this agreement for the town,” Smith noted. “We look forward to continuing to work with Selectman Adams, Selectmen Turner, Selectman Guisinger and the Perry community to draft a final agreement.”

The results from the vote in Perry come on the heels of recent positive votes in local Passamaquoddy reservations, Indian Township and Pleasant Point, which solidified support among both reservations, and helped to stabilize payments to the Tribe for the lease of Passamaquoddy land.


Quoddy Bay LNG Defends Right to Fair Competition with Canadian Companies in United States’ Market
March 23, 2007

Quoddy files FERC request for conditional permitting on the flow of Canadian natural gas into U.S.

Quoddy Bay LNG filed a “Request for Rehearing and Modification” today with the Federal Energy Regulatory Commission (FERC), asking for a condition to be placed on the Maritimes and Northeast Pipeline permit that could effectively resolve the current international debate surrounding LNG facilities in Maine. 

On February 21, 2007, Maritimes received approval from the FERC to expand its existing pipeline which will allow Canada’s Canaport LNG to use the pipeline to carry Canadian natural gas to the U.S. market. This approval came on the heels of the Canadian government’s assertion that it will not allow LNG tankers to pass through the Canadian waters of Head Harbour Passage to deliver their cargo to U.S.-based LNG facilities.

Quoddy Bay’s filing states: “[It] believes that an error occurred in issuing the certificate…to Maritimes because the Commission has not placed conditions upon the authorization to begin delivery of Canadian gas through the new pipeline facilities.”

Quoddy Bay President, Don Smith made it clear that the purpose of this filing is to ensure open and free competition between the U.S. and Canada.  “Our ultimate goal is to achieve healthy competition to provide low cost energy to New England and benefit U.S. consumers.”  Smith went on to explain, “This filing is an effort to ensure that Canada does not take advantage of U.S. free market policies while at the same time blocking Quoddy Bay’s access to the market by prohibiting access to the facility.”

Quoddy Bay representatives believe that open market-based competition can be maintained if the FERC requires reciprocity in market access.   Quoddy Bay is requesting the FERC to amend the Maritimes permit to prohibit the flow of gas from Canada to the United States through the pipeline if the Canadian government bans LNG tanker access to Maine.  Therefore, under this condition, Canadian companies can only utilize U.S. open market access if it allows U.S. companies to do the same.   

Since the mid-1980s, the U.S. has granted Canadian companies access to its pipelines, thereby giving those companies access to the U.S. market and its corresponding benefits.  “The Canadian Government’s request for the FERC to stop its review of our project while at the same time exploiting its non-discriminatory policies for its own ends, should be considered an abuse of the FERC process,” continued Brian Smith.  “We are only asking for Canada to treat U.S. companies fairly and equally, the same way the U.S. currently treats Canadian companies.”

The filing summarizes “access on a fair, non-discriminatory, and timely basis to Head Harbour Passage is just as essential to Quoddy Bay as access to the Maritimes and Northeast Pipeline is to Canaport.”

This issue has recently reached the highest levels of government on both sides due to Canadian Ambassador, Michael Wilson’s letter last month to FERC Chairman Kelliher.  The letter outlined Canada’s plans to ban LNG tanker passage through its waters.  In response, Chairman Kelliher stated the review of the Maine LNG projects will continue despite Canada’s position.  Recent statements from State Department officials demonstrate they believe that the right of free and innocent passage through Head Harbour Passage is granted under international law. 

“Canada and the United States have traditionally benefited from a mutually advantageous energy relationship, and we are merely asking both governments to maintain our right to become a competitor in the natural gas market,” concluded Brian Smith.


Quoddy Bay Commends Congress For GAO StudyOn LNG and Requests Continued Effort
March 21 , 2007

Quoddy Bay LNG, the company developing a liquefied natural gas import terminal in Washington County, Maine has written to the Maine congressional delegation to demonstrate its support for the U.S. Government’s continued efforts to insure LNG importation remains a safe and reliable industry.

“The LNG industry has benefited from an exceptional safety record,” wrote Brian Smith, Project Manager of Quoddy Bay LNG. In the letter, Smith commended Congress for the study and asked if Quoddy Bay could assist Congress in “[their] future studies in order to keep a safe industry safe as it continues to grow”.

A study conducted by the Government Accountability Office (GAO) reviewed six unclassified studies on the effects of a terrorist attack on a tanker carrying LNG. An expert panel also weighed in on the matter to provide critical commentary. Disagreements on the part of the experts and discrepancies in the studies on certain issues resulted in the GAO recommending further study on the effects of a large spill.

Because there has never been a large spill of LNG, the models used to predict outcomes rely upon various assumptions. These assumptions generally are the source of disagreement. However there was a general consensus on two of the most important conclusions. The GAO cites these in their report, and Brian Smith, Project Manager of Quoddy Bay LNG, noted them in his letter.

“Despite some of the disputes that arise from assumptions, two key points are agreed upon by most every expert on LNG,” added Smith. “The major risk from an LNG spill would be a heat hazard due to a potential fire. More importantly, as the GAO confirms, explosions are not likely to occur.”

The GAO noted the need for an increased supply of natural gas as well as the difficulty in siting LNG terminals in the Northeast. The GAO requested that Congress continue to gather data on LNG spills to have the most accurate information available. The GAO also noted that even though many of the conclusions from the Sandia Report are correct, there are other issues that need to be addressed. Currently, the Sandia Report guides the regulators in determining appropriate mitigation strategies for the transportation and storage of LNG. A new report is due out in 2008.

Due to the safe history of LNG but because of its increased demand, the GAO requests further study because “an underestimation of the consequences could expose the public to additional risk in the event of an LNG spill, [while] an overestimation of consequences could result in the use of inappropriate and costly risk mitigation strategies”.

Smith echoed the GAO’s statements about the need for LNG as well as the difficulty in siting terminals in the Northeast. Smith encouraged the Maine delegation to support his company’s efforts to educate the public properly and stated that the recent GAO study was a step in the right direction. According to many experts demand will outstrip supply by 2010 and there will be a shortage of natural gas in the Northeast. The Quoddy Bay LNG project is one of five U.S. proposals that are attempting to send gas to the New England market.

“In order to achieve the goals of satisfying our nation’s energy needs while maintaining public safety, knowledge and education will be key factors,” added Smith. “However, the goal of importing reliable energy will not be achieved if risks are exaggerated and the public is misinformed about the actual risks associated with LNG.”

Quoddy Bay LNG is currently engaged in building the most reliable liquefied natural gas import facility in the U.S. while properly educating its host communities to the stringent mitigation measures it is taking to insure the safety of the project and its neighbors.


 

Quoddy Bay Justifies Right of Passage to FERC
March 6 , 2007

Quoddy Bay LNG reaffirmed that it will continue to move forward with the development of a liquefied natural gas import and regasification facility in Washington County, Maine. Quoddy Bay submitted an “Answer to Letters and Pleadings Regarding Canadian Government Actions to Block U.S. Projects”. The document lays out Quoddy Bay’s legal justification to use the waterway that Canada desires to block access to, and it requests FERC to officially deny the New Brunswick Premier’s request to suspend the hearings.

”We were thrilled to see that FERC Chairman Kelliher has sent a letter to Ambassador Wilson informing him that FERC will continue its review of our project,” said Project Manager Brian Smith. “We wanted to formally supply FERC with appropriate information in hopes that the Commission will officially deny the Premier’s motion” continued Smith.

The filing provides a comprehensive argument of why the Government of Canada will violate various international laws and treaties by attempting to disallow passage of LNG vessels in Head Harbour Passage. The document cites detailed violations to the UN Convention on the Law of the Sea as well as breaches to the General Agreement on Tariffs and Trade and NAFTA. This legal justification is in stark contrast to the argument that the Canadians have put forth so far. The basis for their position is on an undisclosed report that purportedly demonstrates the waterway to be unfit for LNG vessel traffic.

“We have put all of our cards on the table and everything is available for public record” said Smith. “We have already presented our justification for why this waterway is suitable to FERC, so now we are providing our justification that Canada’s actions are in direct conflict with international law and that our ships will have a right to innocent passage” Smith continued.

Among the legal justification that Quoddy Bay provides, the filing infers that Canada’s actions are discriminatory policies that are attempts to stifle U.S. LNG projects. Permits have been received and construction has begun on a Canadian LNG facility in St. John (Canaport LNG) that is being built by Repsol and Irving Oil. The Canaport facility is directed at the same market as Quoddy Bay’s project.

“Our two countries have benefited from one of the greatest trade relationships the world has ever seen” stated Smith. “We are merely highlighting the legal foundations that should ensure a free market is maintained” concluded Smith.


 

Quoddy Bay and the Passamaquoddy Tribe Sign Long Awaited Coordination and Tax Agreement
March 6 , 2007



After over a year of discussions and debates, the two reservations of the Passamaquoddy Tribe have joined together to sign the intensely negotiated Project Coordination and Tax Agreement with Quoddy Bay LNG.

Following the Passamaquoddy Tribe’s Indian Township Reservation vote last week in support of the Quoddy Bay LNG development, the Passamaquoddy Tribe and Quoddy Bay LNG have signed the agreement which would lower the Tribe’s construction tax from 3% to 1% and eliminate all other personal and property taxes for the LNG project on Passamaquoddy land in exchange for substantial lease payments. The agreement initiates lease payments to the Passamaquoddy Tribe, which will be split between the Indian Township Reservation and the Pleasant Point Reservation according to their respective populations.

The agreement was voted on by the Passamaquoddy Joint Tribal Council, comprised of representatives from both reservations, last night and passed 9-2 with one abstention. The agreement was signed today by Chief Rick Doyle of the Pleasant Point Reservation, Governor William Nicholas of the Indian Township Reservation, and Brian Smith, Project Manager of Quoddy Bay LNG.

“While we have had the support of the Pleasant Point Reservation for years, we’re thrilled that the Passamaquoddy Tribe as a whole is now behind the Quoddy Bay LNG development,” said Brian Smith. “We are happily wiring almost half a million dollars in lease payments that have been accruing over the past year.”

“I am happy to be working on the project with representatives from Quoddy Bay and the administration from Pleasant Point. I look forward to moving forward on the project,” said Governor William Nicholas of the Indian Township Reservation. “The people of the Tribe have spoken in overwhelming numbers, and the Joint Tribal Council has finalized the agreement.”

The “Tax Agreement,” as it has been called, originated in the Ground Lease Agreement between Quoddy Bay and the Pleasant Point Reservation as a prerequisite to the payment of the lease payments to the Tribe. Although the Ground Lease is an agreement between Quoddy Bay and the Pleasant Point Reservation, the Tax Agreement had to be agreed to by Tribe as a whole, which includes the Indian Township Reservation. Multiple meetings of each reservation’s Tribal Council and of the Joint Tribal Council over the past year and a half culminated in December of 2006 with an offer from Pleasant Point to Indian Township to share in the lease payments from Quoddy Bay on a per capita basis. The residents of Indian Township voted to accept the offer and support the Tax Agreement and the Quoddy Bay development last week by a 224-10 margin, and the Joint Tribal Council voted to approve the agreement on Monday.

“I’m pleased that we are now going forward, working with Quoddy Bay. The Tax Agreement is a symbol of our combined efforts,” said Ed Basset, a Tribal Council Member at Pleasant Point and a member of the Joint Tribal Council. “I’m also very pleased that we are working with Indian Township, and the Tribe is united on this project.”

“The willingness by the Pleasant Point Reservation to include its sister reservation in the benefits of this project was the key to this agreement” said Fred Moore, Quoddy Bay Tribal Relations Director and former Representative of the Passamaquoddy Tribe. “My goal with this project has always been to benefit both reservations, and with the signing of the Tax Agreement, I think that goal has finally been reached.”

Once the facility is built, up to $12 million a year would be paid in lease payments by Quoddy Bay to the Tribe, depending on the amount of LNG that goes through the facility.



 

Project Overview

Quoddy Bay LNG, L.L.C. proposes to site, construct, and operate the Quoddy Bay LNG Import and Regasification Terminal Project at Pleasant Point and Perry, Washington County, Maine.

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