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Filed more-than-12,000-page application April 1 for FERC approval, last milestone

By AMANDA SCOTT

Staff writer

Dominion Cove Point is one step closer to constructing its liquefied natural gas exportation project after the U.S. Department of Energy conditionally granted Dominion approval to export liquefied natural gas to non-Free Trade Agreement countries.

On Wednesday, the U.S. Department of Energy Office of Fossil Energy conditionally granted Dominion Cove Point Liquefied Natural Gas approval to export by vessel domestically produced liquefied natural gas to countries that don’t have a Free Trade Agreement with the U.S.

“It is good news on many fronts, including the thousands of jobs that will be created, the boost in government revenues that will result, and the support it provides to allied nations,” Dominion Chairman, President and CEO Thomas F. Farrell II said in Dominion’s news release about DOE’s announcement.

The Natural Gas Act directs the DOE to grant export authorizations to countries that do not have an FTA with the U.S. unless the department finds the proposed exports aren’t consistent with public interest.

The approval is subject to environmental review and final regulatory review of the proposed facility from the Federal Energy Regulatory Commission. On April 1 this year, Dominion filed its more-than-12,000-page FERC application encompassing safety, environmental effects, security, cost, community effects and benefits.

FERC approval is the last milestone Dominion needs to reach to move forward with the exportation project, Dominion spokesman Dan Donovan said Wednesday afternoon, adding that the process is “moving along.” He said Dominion requested FERC’s decision in the first quarter of 2014.

According to Dominion’s news release, pending FERC approval and obtaining the necessary permits, construction is scheduled to begin in 2014 with an in-service date of 2017.

The U.S. has free trade agreements with 20 countries, according to the Office of the United States Trade Representative website. However, the signed, 20-year terminal service agreements Dominion has with Japan and India are not countries listed as having FTAs with the U.S., according to the trade representative website.

In October 2011, the DOE granted Dominion the approval to export liquefied natural gas to Free Trade Agreement countries.

On April 1, Dominion announced it signed both 20-year terminal service contracts, saying “Japan and India are important allies and trading partners of the United States that are in need of secure sources of natural gas.”

In an email from Donovan, he explained that since Japan and India don’t have FTAs with the U.S., “we needed to get DOE approval in order for those countries to be our customers.”

In addition, he wrote in the email that with the DOE’s approval, “technically, our customers can now export to any country where the U.S. is not prohibiting trade,” which means Japanese trading company Sumitomo Corp. and GAIL India Ltd. could choose to export their LNG to other countries.

“Both Japan and India have expressed their countries’ future needs for energy to the U.S. government,” Donovan wrote in the email. “Japan is looking for reliable, long-term energy supplies after the nuclear disaster that hit their country. Many of their nuclear power generation plants have been shut down. India has a growing population and is also looking for reliable, long-term energy supplies. Both of the companies signed 20-year contracts beginning in 2017, so it is apparent they are looking at long-term supplies for the countries where they do business.”

The DOE news release announcing Dominion can export to non-FTA countries explains that the department conducted “extensive, careful review of the application to export LNG from the Dominion Cove Point LNG Terminal. Among other factors, the Department considered the economic, energy security, and environmental impacts — as well as public comments for and against the application and nearly 200,000 public comments related to the associated analysis of the cumulative impacts of increased LNG exports — and determined that exports from the terminal at a rate of up to 0.77 [billion cubic feet per day] for a period of 20 years was not inconsistent with the public interest.”

But the DOE’s conditional approval isn’t going unnoticed by those entities opposed to the project, including nonprofit environmental law group Earthjustice, the nonprofit Chesapeake Climate Action Network that fights global warming in the Maryland, Virginia, and Washington, D.C. area, as well as the Potomac and Lower Susquehanna riverkeepers and The Sierra Club.

In an Earthjustice news release, Earthjustice associate attorney Jocelyn D’Ambrosio said, “Dominion managed to convince the Department of Energy that exploiting the people of the Marcellus and Utica shale regions for the sake of the oil and gas industry was a good idea.

“But they’ve still got a long way to go before they can convince the rest of us that we should pay higher fuel prices, sacrifice our safety and threaten public health,” she said in the release. “Dominion should be prepared to face stiff resistance at each remaining step in their ongoing approval process.”

Deb Nardone, director of The Sierra Club’s Beyond Natural Gas Campaign, said in the Earthjustice release that with the DOE’s approval, “it is deeply disappointing to see that Secretary [Ernest] Moniz persists in leading the nation and the world into a dirty energy future. It’s a bad deal all around: for public health, the environment and America’s working people.”

Guy Alsentzer of Lower Susquehanna Riverkeepers had a similar sentiment, saying, “DOE’s decision to authorize DCP’s proposed LNG export plan, even though conditioned on yet-to-be-performed environmental reviews, smacks of poor decisionmaking.”

In DOE’s 156-page decision, it states that Dominion “must commence export operations using the planned liquefaction facilities no later than seven years from the date of this issuance of this Order.”

The decision also requires Dominion’s customers or purchasers to submit a report to Dominion identifying the country that actually received the exported LNG.

The DOE also is requiring Dominion to provide written notification of the date that the first export of liquefied natural gas occurred within the two weeks of the first export.

On a semi-annual basis, Dominion is required to file written reports describing the progress of the liquefaction project with the Office of Oil and Gas Global Security and Supply. And, on a monthly basis, according to DOE’s decision, Dominion is required to file with the Office of Oil and Gas Global Security and Supply within 30 days following the last day of each calendar month, a report indicating whether exports of liquefied natural gas have occurred.

ascott@somdnews.com