Goldman Sachs leaving Calais LNG - Jul. 22, 2010
Move puts future of LNG plan in doubt
By BARB RAYNER
barbrayn@nbnet.nb.caCALAIS – Opponents of LNG in the region hope the Goldman Sachs move to pull out of Calais LNG spells the end of the controversial project.
A letter sent to the Maine Board of Environmental Protection (BED) Wednesday by the company’s attorney, David Van Slyke of PretiFlaherty, asked for the postponement of a conference of counsel slated for Friday.
The letter revealed Goldman Sachs is in the process of selling its interests in the project to another financial partner.
Van Slyke also said that, in the event the transaction does not close by August 11, Calais LNG would expect to withdraw all Calais LNG applications filed with the BED which is fuelling speculation from LNG opponents that the project may be dead.
Jessie Davies, co-chair of Save Passamaquoddy Bay/Canada, is hoping that Goldman Sachs withdrawal from the project means it is dying although she said they have no idea at this point where it is going.
“It is fabulous news - no doubt about that - but it is not a complete surprise because we have just had this postponement. There is no need for it and Canada has been unrelenting in its opposition. I think at a certain point they just figured it is not worth it.”
The letter send to the BED said Calais LNG is currently in the process of transitioning ownership interests.
“Calais LNG anticipates that this transaction will occur within three weeks (i.e. by Aug 11, 2010). Upon completion of this transaction, Calais LNG will amend Section 3 of its Site Location Development application (financial capacity) to reflect the new ownership and financial backing of the project.”
Van Slyke goes on to say that once the new ownership structure is in place and the site location application amendment is filed, Calais LNG would anticipate, and welcome, a conference of counsel to address all of the topics which were on the agenda for Friday.
The company is also withdrawing and refiling its Water Quality Certification request and has executed a stay agreement regarding its application for a Coastal Zone Management Act Consistency Determination.
This letter comes on the heels of Calais LNG’s request for a postponement of the BED hearings which were slated for this week because they didn’t have all the necessary information. It also comes 10 days after the Calais Planning Board approved the company’s land development plan.
Calais LNG is proposing to build a LNG receiving terminal and storage facility on the outskirts of the city on a 330-acre site with 2,800 feet of shoreline along the St. Croix River and Passamaquoddy Bay.
The project is being welcomed by many in Washington County as it is expected to create 290 construction jobs over a period of four years and 70 to 80 permanent operations and maintenance jobs.
Representatives of Calais at the Calais LNG office and project manager Ian Emery did not respond to interview requests before the Courier Weekend’s deadline (noon, EDT Thursday).
As much as Davies welcomed the news, he also urged caution.
“We know people do invest in stupid things and just because it is stupid, inappropriate and Canada won’t allow it and there is no market for it does not mean it is not going to happen.
“It could sell. Goldman Sachs probably has some $20 million already sunk into this project so they will try to recoup as much of this as they can. There may be someone who thinks they can make this go.
“Obviously they have not said why they have withdrawn but we can assume they have looked at the market data and realized LNG markets just won’t support this project because the U.S. has 200 years supply domestically.”
In fact, said Davies, some of the LNG terminals in the U.S. are now applying to be export rather than import facilities.
“But it is still possible somebody would buy it because it could go at a bargain-basement price. Somebody may think it’s worth a gamble to carry it through. That said – their credibility with the BED is at an extremely low level.”
If this is a bad investment for Goldman Sachs, Davies questioned how it could be a good investment for someone else. If Goldman Sachs thought it was going to be a good investment, she said, they would not be selling out.
“If it is not happening I feel sorry for the people in Washington County because they have been sold a bill of goods but with the markets the way they are I think anyone can connect the dots.”
St. Andrews Mayor John Craig said this was great news for the town and he believes Goldman Sachs has seen the writing on the wall.
“They realize it would be impossible to put money into a project if you have to fight a country (Canada) and I cannot see anybody else stepping in.
“I want to make it very clear that St. Andrews is not against LNG but it has to be in the proper place and Passamaquoddy Bay is not the proper place for this type of industry.
“As a town, we understand Calais’s concerns for sure. They need some type of stimulus to get their economy going but doing it at the price of taking industry away from neighbours on the opposite side is not the way to do it.”
Related editorial, page 4
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