From: Stearns, Alan

Sent: Wednesday, February 04, 2004 10:25 AM

To: Smith, Rose
Cc: Adams, Kurt; Umphrey, Lee; Lincoln, Jane; Cashman, Jack; Sosnaud, Jeff; Cole, David A

Subject: LNG Sears Island


The first party (of two) to express interest in Sears Island continues to call with concerns that MDOT has not yet granted an option. To the extent that this party is competing with Conoco Phillips re schedule, (and perhaps for Sears Island if Harpswell fails on March 9), he is focused on securing an option by March 9th. David Cole is handling this personally, and while an option by March 9 is a real possibility, David is making a point to take time to protect state interests against any charge that we rushed into an option without due diligence, or gave one party an option absent any opportunity for competition at defined standards.

MDOT has hired a Boston-based firm, Levitan, to advise MDOT. Levitan is qualified for appraisal of the property, and is advising on standards of due diligence to justify exclusion of certain interested parties. Levitan is also drafting standards to assure that the option expires if demonstrable progress (FERC, eg) is not made toward development.

While the state is not moving as quickly as planned for an option, and might get accused of missing an opportunity, I support David's approach to guarantee that the option and the selection of a purchaser in done with fully defensible process. Every indication is that opportunities exist for development of the island, and that a primary concern should be structuring a sale at a high standard in the best interests of the taxpayers.

Alan Stearns

Senior Policy Advisor
Office of Governor Baldacci
Slate House Station 1
Augusta. ME 04333-0001
(207) 287-3531 (voice)
(207) 287-1024 (fax)