The U.S. Department of Energy signed off this week on Dominion Resources Inc.’s plan to export liquefied natural gas from a facility it is building in Maryland to countries with which the U.S. does not have a free trade agreement.
The federal ruling will allow Dominion to export up to 770 billion cubic feet of liquefied natural gas per day for 20 years from its Cove Point terminal, a $3.4 billion to $3.8 billion project with a projected completion date of late 2017. The Federal Energy Regulatory Commission approved the plan last fall.
The energy department previously had approved Dominion exporting liquefied natural gas to countries with free trade agreements.
Thomas F. Farrell II, chairman, president and CEO of the Richmond-based energy giant, said during the company’s annual shareholders meeting this week that the Cove Point facility will sell to markets in Japan and India, where the price of natural gas is far higher than in the U.S.
The company has previously said the project’s marketed capacity is fully subscribed, with 20-year service agreements with Japanese and Indian energy companies.
Farrell said Dominion Midstream, a holding company for some of Dominion Resources’ most valuable natural gas assets, will boost the company’s cash flow by $7 billion between 2015 and 2020, largely thanks to Cove Point.
Right now, Cove Point is primarily set up to receive liquefied natural gas from ships and “re-gasify” it, changing it from a liquid back to a gas vapor.
The company has infrastructure in place to gather, process and pipe natural gas from America’s richest shale gas region, the Appalachian basin’s Marcellus shale. The proposed additional facilities at the plant will be able to supercool natural gas, turning it into a liquid for export.
But environmental groups trying to halt Dominion’s plan have sued the federal government, claiming Dominion received approval without thorough environmental reviews.
The lawsuit, filed in the federal appeals court for the Washington, D.C., circuit, claims that the Federal Energy Regulatory Commission failed to consider the potential for increased pollution that could come if Cove Point triggers an expansion in hydraulic fracturing for natural gas in the U.S.
“Exporting nearly 1 billion cubic feet of (liquefied natural gas) per day means more gas drilling, which wreaks havoc on both the climate and the communities scarred by wells and pipelines,” said Jocelyn D’Ambrosio, senior associate attorney at Earthjustice, a nonprofit environmental law organization.
Carolina Gas Transmission operates almost 1,500 miles of natural gas pipelines in South Carolina and Georgia.
“We are asking the federal court to ensure that FERC evaluates the many ways that the Cove Point project will degrade the environment.”
Dominion, which is also overseeing plans to build a 500-mile natural gas pipeline from West Virginia through Virginia and North Carolina, applauded the energy department’s decision.
“The DOE’s review was thorough. Our Cove Point terminal will have a tremendous economic impact on our nation, Maryland and Calvert County (Md.). The project was approved following federal and state approvals in a process unrivaled in its scope and public input,” said Jim Norvelle, a Dominion spokesman.
“The natural gas that will be liquefied at Cove Point will become reliable energy with cleaner air for important U.S. allies. Meanwhile, more natural gas is projected to be produced to keep domestic prices reasonable.”
The Cove Point LNG Export project will cost an estimated $3.4 billion to $3.8 billion. The company expects to start exporting liquefied natural gas to customers in India and Japan in late 2017.