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LNG Opportunity
Greets 'People of the Dawn'

    According to the Federal Energy Regulatory Commission, liquefied natural gas now comprises 2 percent of the natural gas used in the Northeast, but could provide up to 17 percent by 2025. Potentially helping it along is a proposed US$400-milllion LNG receiving terminal at Pleasant Point, Maine, on land in Washington County owned by the Sipayik members of the Passamaquoddy Tribe, also known as the "People of the Dawn." The project is known as the Quoddy Bay project, after the Oklahoma LLC that is pursuing it.
      In January 2005, Maine Gov. John Baldacci and the state's five tribes unveiled a Native American Manufacturing Initiative, based in part on a $200,000 Cluster Enhancement grant from the Maine Technology Institute. "This project represents a chance to take full advantage of emerging economic opportunities and enhance the overall self-sufficiency of our Native American communities," said Baldacci.
      Also helping along LNG projects are increased calls by federal elected officials for a geographically diversified energy facility base in the U.S., after seeing what was wrought by Hurricanes Katrina and Rita. In fact, Sen. Pete Domenici, a proponent of increased U.S. LNG terminals, was holding hearings on the topic in mid-October.
      There are three potential LNG projects alive and kicking in this corner of Maine, which is about as far "Downeast" as you can get before setting foot in both Canada and the Atlantic time zone. In April, residents of Perry, Maine, voted 279-214 against another proposal of the project to use land the tribe annexed from the town. But the Pleasant Point project in July 2005 secured approval of its land lease deal from the Bureau of Indian Affairs, after receiving tribal council approval in May 2005. Further study of the navigation and safety plan for the facility yielded a thumbs up from Houston-based environmental and security consulting firm TRC. The Maine State Planning Office's regional output simulation model has calculated an economic impact approaching $63 million in income alone for the project's construction and operations phases combined. The facility would employ 80 people once operational.
      The other Native American project, a $500-million facility under the aegis of BP Consulting Partnership, would actually be owned by the tribe, and operated on land in the city limits of Calais, a town on the Canadian border that is also in the midst of welcoming an updated and expanded border crossing. The project would process up to 1 billion cubic ft. per day of LNG.
      A third LNG terminal proposal is another $400-million project from Downeast LNG, an affiliate of New York-based Kestrel Energy, headed by Dean Girdis, a former energy consultant to the World Bank. That project would be located on an 80-acre (32-hectare) site in Robbinston, also in Washington County.
      Officials concede that the area is only likely to be able to support one or two LNG terminals. Tamara Young-Allen, public affairs specialist with the Federal Energy Regulatory Commission (FERC), tells Site Selection none of the three proposed projects has even reached pre-filing status, but they're all on the radar. She says the Calais project would be the first of the dozens of LNG applications that FERC has reviewed that would be located on Native American property.
      Fred Moore III, Passamaquoddy tribal representative and, separately, one of the signatories on the BP Consulting project in Calais, says that Quoddy Bay will not make it to the finish line.
      "The consensus is FERC will approve the project with broadest benefit and least impact," he says. "Split Rock [Pleasant Point] would appear to be demonstrating significant impact and minimal benefit — the gas is going to pass through and so is the money. It amounts to renting Indian land for next to nothing, when compared to the value of the project. You're looking at hundreds of millions of dollars of income annually, and approximately $4 million in rent to the reservation. That is not necessarily something I envisioned when I introduced these people to the tribal government, back in May of 2004."
      Actually, the agreement calls for about $6 million in total funds to go to the tribe annually, according to the project's latest releases, but that's down from $8 million in earlier announcements. In any case, Moore says there are other obstacles too, including the running of a pipe under a river bed for approximately eight miles (13 km.), disrupting fisheries, and the displacement of a high-usage ceremonial ground on the reservation. But the animosity may be running deeper than either tradition or local waters.
      "I had proposed that the tribe own the facility, and the tribe manage it for them," says Moore. "Under tribal ownership, the facility would be corporate tax-exempt, as opposed to renting Indian land. The response from the principal at the time, from Quoddy, was 'If I can't have it, why should I let you have it?' I was somewhat bewildered by that, and countered by saying, 'Because it's called a partnership, and we need to maximize the benefits accorded to each partner. If you want to just come and rent tribal land, you're looking to buy islands for beads, and I don't support that ... the days of renting Indian land for cheap are over, and you're dealing with a new generation of tribal members.' "
      Quoddy Bay officials did not respond to a query from Site Selection. Needless to say, Moore is now distanced from the project. And he has grown closer to the Indian Township project in Calais. He negotiated an agreement that gives BP Consulting exclusive rights to negotiate on the tribe's behalf. So far, the company has optioned and purchased approximately 360 acres (146 hectares) from two owners, with significant shore frontage. The plan received unanimous backing from the Calais city council. And tribal ownership immediately confers that 38-percent corporate tax avoidance.
      In an "Atlantica" region that is going to see LNG terminals, whether in Maine or the Canadian maritimes, it's now a race to the finish, and Native American partnerships may play a crucial role in determining the winners.
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