The sole financial backer of a proposed $1 billion liquefied natural gas terminal in Calais declined to comment today on why it is pulling out of the project.

Ed Canaday, a spokesman for global investment bank Goldman Sachs and its subsidiary, GS Power Holdings LLC, said the firm would have no comment.

Calais LNG told state environmental regulators Wednesday that if Goldman Sachs can’t sell its ownership interest by Aug. 11, all permit applications would be withdrawn. GS Holdings has invested roughly $24 million so far in studies and permit applications.

The loss of Goldman Sachs is the latest setback in efforts to build an LNG terminal in eastern Maine, an energy project that many officials and industry leaders insist is crucial to the state’s economic health.

Environmental groups and other project opponents, however, see it as vindication of their view that an LNG terminal isn’t needed in eastern Maine.

Meanwhile, the developer of a competing LNG terminal south of Calais says he continues to move ahead with his project.

A week ago, Calais LNG startled the Maine Board of Environmental Protection with a last-minute request to postpone long-scheduled hearings on its permit application. The board reluctantly agreed, and had set Friday as a day to meet with lawyers involved in the case and reset the hearing date.

But late Wednesday, Calais LNG again made a surprise request, asking the board to cancel Friday’s meeting. Shortly after noon today, Susan Lessard, the board’s chair, agreed. She instead set up a conference call with the parties to try to determine the project’s status, according to Cynthia Bertocci, the board’s executive analyst.

“We need to know more about where the project is headed before we pursue the details,” she said.

Representatives of Calais LNG didn’t respond to voice mails and e-mails from The Portland Press Herald seeking comment.

Calais LNG wants to build a gas delivery terminal on 330 acres along the St. Croix River, seven miles south of downtown Calais. The project would feature a 1,000-foot pier, two or three storage tanks and 20 miles of underground pipe connecting to the Maritimes & Northeast Pipeline. The terminal would have the capacity to move 1 billion cubic feet of gas daily, and be served on average by one or two tankers a week.

Supporters say an LNG terminal is critical to Maine’s economy. It would give the state a locally stored supply of natural gas, which would help lower energy costs, create jobs and encourage paper mills to switch from oil.

But critics say the impacts to coastal wetlands and fishermen, and the potential hazards of large LNG tankers navigating Passamaquoddy Bay and the St. Croix River, argue against siting a terminal in the area.

New natural gas sources elsewhere, such as shale gas deposits in Texas and the Northeast, further reduce the need for a terminal in Maine, they add. They see the exit of Goldman Sachs as a strong indicator that the numbers no longer add up.

“I think their departure is clear evidence that the market doesn’t agree that any need exists,” said Sean Mahoney, vice president of the Conservation Law Foundation.

Another critic says the combination of poor economics, an inappropriate site, and the impact on fishing and tourism are combining to doom the project.

“The fact that Goldman Sachs has pulled out is a reflection of the project’s lack of value,” said Ronald Shems, a lawyer representing Save Passamaquoddy Bay and Native American opponents.

To justify its request for the permit hearing delay, Calais LNG told the board last week that it was unable to gather some key information, such as soils test data and fisheries impacts. Mahoney and Shems question whether that was the true motivation, or whether the pending loss of Goldman Sachs played a role. Mahoney called the reasons “a convenient excuse” to put off the hearings.

“Calais LNG is manipulating the process,” Shems said. “The real story seems to be coming out in drips and drabs, and we are yet to hear the real story of the serious and larger problems that Calais LNG is facing.”

A lawyer representing Calais LNG, David Van Slyke, didn’t return phone calls and e-mail today asking if the developers had been aware last week of Goldman Sachs’ pending pullout, and whether that had any bearing on their actions.

Three companies have been attempting in recent years to build an LNG receiving terminal in Passamaquoddy Bay.

One of them, Quoddy LNG, has withdrawn its applications for a project at Pleasant Point. If Calais LNG gives up, that would leave only one company pursuing a terminal on the Maine coast, Downeast LNG. The company wants to build its project nearby in Robbinston, at the mouth of the St. Croix River.

Downeast continues to have the financial backing it needs, according to Dean Girdis, the company’s president. The sole investor is Kestrel Energy Partners LLC, a private equity investment firm in New York.

Kestrel has spent more than $15 million and expects to invest another $2 million, Girdis estimated, to secure the necessary state and federal permits. Downeast has won a draft environmental permit from federal regulators and is preparing to resubmit state permit applications within the next few weeks.

Girdis downplayed the significance of Goldman’s exit. GS Power Holding invests in power plants, he said, but is a minor player in the LNG world. The firm has spent roughly $24 million so far on the project, according to Calais LNG. Girdis said that by his estimates, the project could need another $10 million or so to pursue approvals.

“Maybe they spent more money than they expected to,” he said.

Girdis also dismissed opponents who say Calais’ troubles are evidence that a sudden glut of domestic natural gas has killed the market for LNG in New England. There’s not enough pipeline capacity for new gas supplies in the Northeast to reach New England, he said.

Recent LNG projects in Massachusetts and New Brunswick won’t satisfy demand after 2025, he added.

“If I agreed with them,” Girdis said of LNG opponents, “we wouldn’t be doing what we’re doing.”

Staff writer Tux Turkel can be contacted at 791-6462 or
tturkel@pressherald.com