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Project forges ahead, despite objections

By MEGHAN RUSSELLStaff writer

Despite protests to the proposed expansion at its Lusby facility, Dominion Cove Point Liquefied Natural Gas is moving ahead with its plans to expand to an export facility and recently acquired two customers who support the endeavor.

On Thursday Dominion announced that the company signed binding precedent agreements in late March — one with an unnamed shipper and the other with Sumitomo Corp., “a major Japanese corporation with significant global energy operations,” according to a company press release. Between the two shippers, the planned project capacity is about 750 million cubic feet per day on the inlet and about 4.5 million to 5 million metric tons per annum on the outlet.

That capacity size is slightly smaller than the 1 billion cubic feet per day previously planned, but spokesman Dan Donovan said, “We decided it was the perfect size for both the site and the customers.”

Dominion would provide liquefaction, storage and loading services, but would not own or directly export the LNG, the release states. An application for exports to countries with a free trade agreement with the U.S. was approved last fall, and Dominion still awaits Department of Energy approval to export to non-FTA countries. Construction is expected to begin in 2014 with an in-service date of 2017, pending approvals, terminal service agreements with the shippers and engineering studies.

The announcement came the same day the Sierra Club Maryland Chapter announced its rejection of the proposed expansion. Due to a 1970s legal settlement, the environmental organization said in its announcement that it has the ability to reject any significant changes to the purpose or footprint of the existing Cove Point LNG import facility.

Converting the facility to accommodate exports would negatively affect the Chesapeake Bay, coastal forests and the local economy and tourism, the announcement states.

“As a regular visitor to the Bay and parks like Calvert Cliffs State Park, just north of Cove Point, I see first-hand how expanding this facility will tear into our protected forest land and destroy precious coastline,” Dave O’Leary, Sierra Club’s Maryland Chapter chairman, said in the announcement. “Sierra Club’s Maryland Chapter is proud to be the first of Sierra Club’s chapters to reject dirty LNG exports, and we will support other chapters in their efforts to stop these dangerous projects.”

The export of LNG also will result in increased “fracking” in the Marcellus Shale along the East Coast, the announcement continues, citing the process as understudied and dangerous.

But Dominion’s chairman, president and CEO, Thomas F. Farrell II, said in a press release that he is confident that the existing agreement with the Sierra Club and Maryland Conservation Council permits the company to expand the Lusby facility without expanding the existing footprint.

“As with any project of this magnitude, we would expect some opposition from various special interest groups,” he said in the release. Last fall a handful of riverkeepers organizations announced their opposition to the project as well. “The Sierra Club, which is a party to an agreement restricting activities on portions of the Cove Point property, has previously expressed its opposition to all LNG export facilities. We have reviewed the regulations and agreements governing the site and are confident we can locate, construct and operate a liquefaction plant at Cove Point. The project can be built within the footprint of the existing facility without amending the agreement involving the Sierra Club and the Maryland Conservation Council. Dominion plans to design, build and operate the facility with minimal environmental impacts.”

Farrell said the Cove Point project would have less environmental impact than other liquefaction projects proposed for greenfield sites. He also noted that the Cove Point facility has been cited many times for its environmental stewardship, such as for the restoration of the 190-acre Cove Point freshwater marsh, a Maryland Natural Heritage Area along the bay.

Economic studies filed with Dominion's federal approval applications anticipate a number of significant benefits from the project, including: an average of 750 construction workers securing employment during the three-plus years of construction; between 2,700 and 3,400 total jobs associated with the project in Calvert County alone at the peak of construction activity; another 14,600 jobs created once the shippers begin natural gas exports; about $1 billion annually of additional federal, state and local government revenues generated directly and indirectly; owners of the natural gas rights receiving an estimated $9.8 billion in royalties from production of natural gas over the life of the project; and the potential for the natural gas exports to lower the U.S. trade deficit by $2.8 billion to $7.1 billion annually.

mrussell@somdnews.com