Legal & Regulatory

FERC Approves Cove Point LNG Export Terminal Project

After more than a year of deliberation, the Federal Energy Regulatory Commission (FERC) approved Dominion’s proposal to construct and operate liquefaction and export facilities at its existing Cove Point liquefied natural gas (LNG) import terminal located in Lusby, Md.

The proposed export facility will be contained within the existing footprint of the 131-acre import terminal site. The company says no new pipelines or storage tanks are needed at the facility, which began operation in 1978. Approval was also given for Dominion to add compression at its existing Pleasant Valley compressor station and to modify the existing Pleasant Valley and Loudoun metering and regulating sites, located in Fairfax and Loudoun counties, Virginia. The project will enable Dominion to transport up to 860,000 dekatherms per day of natural gas from existing pipeline interconnects for the export of up to 5.75 metric tons of LNG per year.

Last year, the U.S. Department of Energy conditionally approved Dominion Cove Point’s export of gas to both Free Trade Agreement and non–Free Trade Agreement countries, and Dominion has already fully subscribed the marketed capacity of the project through 20-year service agreements with companies from Japan and India.

Dominion states that it will use its facilities initially to provide liquefaction and export service, and will likely continue to do so barring significant changes to worldwide gas markets. The company says that to maintain flexibility, the liquefaction project will allow for bi-directional import or export service, but that it cannot provide both services at the same time. Rather, its customers may make a joint election once a year whether to receive import and regasification service or liquefaction and export service.

Dominion must still review and accept the order. Upon completion of that review, the company expects to file an implementation plan describing how it will comply with the conditions set forth in the order. Dominion expects to ask the FERC for a “Notice to Proceed” at that time and plans to begin construction when the notice is received. The process is expected to take several weeks.

IHI/Kiewit Cove Point, a joint venture between IHI E&C International Corp. and Kiewit Corp., is the engineering, procurement, and construction contractor for the new liquefaction facilities. Construction of the export project is expected to cost between $3.4 billion and $3.8 billion. Current intentions are to complete construction so that the LNG export terminal may start service in June 2017. Construction of the related Virginia facilities would begin in 2016 and would be placed in service by March 2017.

“Initially, Cove Point helped the United States overcome what was then an energy shortage,” said Diane Leopold, president of Dominion Energy. “Now that our nation is developing a burgeoning surplus of natural gas, Cove Point can help send a small portion of that surplus to allied nations looking for stable supplies of clean energy, supporting economic development and replacing coal as a fuel.”

FERC has approved three other LNG export projects, all in the Gulf of Mexico: the Sabine Pass Liquefaction Project, the Freeport LNG Project, and the Cameron LNG Project. Fourteen LNG export proposals are pending.

Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)


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