OREANDA-NEWS. The Maine Public Utilities Commission (PUC) has suspended a plan to build an LNG production and storage facility because neighboring states are reluctant to fund gas pipeline expansions.

Maine wants to install a new LNG peakshaving facility in the state to liquefy relatively cheap gas from the nearby Marcellus shale field for use during peak winter demand days. But without additional transportation capacity the state will not have adequate access to such gas.

The PUC said on 14 September that it would negotiate to buy capacity on two proposed pipeline expansions in New England, but because nearby states are not adequately supporting the projects it has concluded "it is not an efficient use" of its resources to pursue such negotiations.

"Therefore, further activity in this proceeding will be postponed pending either positive developments in the region regarding regional pipeline efforts," the PUC said, adding that its authority to acquire pipeline capacity ends on 31 December 2018.

Maine accounts for about 9pc of New England gas consumption and relies on Canadian gas from two interstate pipelines to meet virtually all its demand. It has only one small LNG peakshaving plant, with capacity of about 10mn cf/d (283,000m?/d).

A number of projects have been proposed to increase transportation capacity in New England, where winter gas prices can spike because of regional pipeline constraints. In November Algonquin Gas Transmission's Incremental Markets expansion began partial flows, but that 330mn cf/d project will not have any delivery points in Maine.

On 14 September, the PUC said it would negotiate to acquire 9pc of the capacity on the planned Access Northeast pipeline expansion, which was originally scheduled to add as much as 900mn cf/d of northward capacity by 2018 along Spectra Energy's Algonquin and Maritime & Northeast systems.

Spectra said on 2 November it would delay that project until at least 2019, as rulings in Massachusetts, New Hampshire and Connecticut prohibited electric utilities from passing pipeline capacity costs to ratepayers. That has made it difficult for Spectra to secure customers to fund the expansion.

The Maine PUC said on 14 September that if the Access Northeast project did not move forward, it would negotiate for capacity on TransCanada's C2C project, which would roughly double capacity on the 162mn cf/d Portland Natural Gas Transmission System, providing additional access to Marcellus and western Canadian gas.

On the same day, the PUC issued a request for proposals for construction a new LNG peakshaving facility in the state.

Under a 2013 state law, the PUC can contract for as much as 200mn cf/d of pipeline transportation capacity, at a maximum cost of $75mn/yr. The PUC can pass on the costs to gas and electricity customers, but any decision by the PUC must be approved by the governor.

The law was amended in 2016 to allow the PUC to also contract for LNG storage capacity to be built in the state at a cost not exceeding $25mn/yr. The state's combined cost for pipeline and LNG storage capacity cannot exceed $75mn/yr.