FERC gives Dominion approval to build Cove Point LNG export project

The US Federal Energy Regulatory Commission gave Dominion Cove Point LNG LP authorization to build an LNG export facility on the Chesapeake Bay near Lusby, Md., east of Washington, DC. The project’s sponsor, Dominion Resources Inc., said it would file an implementation plan once it has reviewed the decision and ask FERC for permission to begin construction.

“This order is based on more than 2 years of thorough, exhaustive analysis by FERC along with numerous other federal and state agencies,” Dominion Energy Pres. Diane Leopold said following FERC’s Sept. 29 announcement. “It also reflects a robust public input process. Dominion is dedicated to constructing a safe, secure, environmentally compatible, and reliable export facility.”

The review and request to FERC for a “Notice to Proceed” will take several weeks, the Richmond, Va., company said. Building the $3.4-3.8 billion project will include construction of several related facilities in Virginia beginning in 2016 so the full project can go into service in June 2017, FERC said.

The project previously received US Department of Energy approval to export LNG to countries which have a free-trade agreement with the US as well as others which do not (OGJ Online, Sept. 13, 2013).

Dominion noted that Cove Point is the fourth US LNG export project to receive federal approval to site, construct, and operate. It will be the first on the East Coast. Dominion notified FERC in June 2012 that it was planning to add export capacity to a terminal which had been built to import LNG earlier.

In existing footprint

The proposed export facility will be within the 131-acre footprint of the existing LNG terminal site, which has been in Calvert County on Chesapeake Bay’s western shore for nearly 40 years, the company said. No new pipelines or storage tanks will be needed there, it added.

FERC said Dominion would transport as much as 860,000 dth/day of gas through existing pipelines to the facility for liquefaction, and export as much as 5.75 tonnes/year of LNG. The commission found that the proposal, as mitigated with 79 conditions found in Appendix B of its Sept. 29 order, is in the public interest.

Dominion said it has fully subscribed the project’s marketed capacity. It has 20-year service agreements with ST Cove Point LLC, a joint venture of Sumitomo Corp., a Japanese trading company, and Tokyo Gas Co. Ltd., Japan’s largest gas utility; and GAIL Global (USA) LNG LLC, a wholly owned indirect US subsidiary of GAIL (India) Ltd., one of that country’s largest gas processing and distribution companies.

IHI/Kiewit Cove Point, a joint venture of IHI E&C International Corp., Houston, and Kiewit Corp., Omaha, Neb., is the engineering, procurement, and construction contractor for the new liquefaction facilities.

Initial comments

US Sen. Lisa Murkowski (R-Alas.), the Energy and Natural Resources Committee’s ranking minority member, applauded FERC’s action. “The economic and energy security benefits of exporting LNG to our friends and allies are irrefutable,” she said on Sept. 30. “I hope DOE will quickly follow suit and issue a final license for Cove Point to begin exporting LNG.”

Two oil and gas groups also responded to the news that FERC had authorized the project. “We welcome today’s approval, and we urge DOE to avoid any needless delay of the project’s final permit, which received conditional approval over a year ago,” said Erik Milito, American Petroleum Institute upstream and industry operations director, on Sept. 29.

“It’s time to lock in America’s position as an energy superpower by approving Cove Point and accelerating the process for dozens of other projects still facing lengthy delays,” Milito said.

The facility will make available for export 1.8 bcfd of the Marcellus shale’s vast gas supplies, Dan Whitten, America’s Natural Gas Alliance’s senior director for communications and media affairs, said in a Sept. 30 blog.

“To put that in perspective, 1.8 bcfd is a little more than 10% of the gas produced every day in the Marcellus region and less than 3% of what we produce daily in the United States,” he noted.

Contact Nick Snow at nicks@pennwell.com.

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