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Dominion: Report is ‘totally false’


Staff writer

Based on a new financial report, environmental groups are claiming Dominion Resources doesn’t have the necessary funds for its proposed $3.8 billion liquefied natural gas export project at its Cove Point facility.

On Wednesday, Profundo, a Netherlands-based research company, released its report, “The financing of Dominion Resources.” Environmental groups held a teleconference Wednesday morning during which they claimed the report demonstrates Dominion can’t fund its project, which is still in the permitting and approval process, and warned investors of the controversy surrounding the project.

“The Profundo report … could find no evidence that Dominion has secured the financing for the project,” Doug Norlen, policy director at Pacific Environment, said during the teleconference. “For Dominion to say they have secured financing and to not identify the source is rather odd and raises tough questions for potential investors.”

The report was prepared for Pacific Environment, an organization dedicated to protecting the living environment of the Pacific Rim, and Chesapeake Climate Action Network, a nonprofit group that fights global warming in the Maryland, Virginia and Washington, D.C., area, according to Profundo, an economic research consultant. CCAN also has held meetings in Southern Maryland rallying against the proposed LNG project.

The report assessed Dominion’s financing by financial institutions since January 2010 with a focus on financing that could be used for the Cove Point export project.

Dominion Resources will attract a project loan for 60 to 70 percent of the total estimated construction costs ($3.8 billion), and 30 to 40 percent of that would have to be financed by existing financial stakeholders of Dominion Resources, according to the report.

The report does not make the conclusion outright that Dominion does not have the funds for the Cove Point LNG export project. When asked to clarify the report’s findings, Jan Willem van Gelder, one of the report’s authors, said in an email, “Dominion Resources has stated that it is looking at long-term debt for the Cove Point project, seeking a 16-year project loan for 60 percent to 70 percent of the projects total cost. According to our information, it has not yet secured this project loan.”

Dominion’s Manager of Media Relations Dan Donovan said the report is “totally false.” Dominion isn’t using project financing for the Cove Point venture, as the report states, and already has the necessary funds in place, he said.

“It’s going to be financed by Dominion Resources Incorporated,” he said, adding, “We do have a financing plan in place that Wall Street likes, and we do have customers in place.”

The company sold mandatory convertible security, Donovan said, to finance the project. Mandatory convertible security is a bond that must be converted to common stock in the company issuing it at a certain time.

“We have the money. They are listed as the shares on the stock exchange, but we’ve got the money,” Donovan said.

Officials from Pacific Environment, CCAN, Earthjustice, a nonprofit environmental law group, and Interfaith Power & Light (D.C., MD, VA), an organization that helps congregations address global warming through actions and policies, spoke during the teleconference.

One item that “jumps out” in the report, Norlen said, is that the capital expenditure costs “seems kind of small” based on his experience of looking at fossil fuel project financing and LNG projects worldwide.

“It seems to us that their projected cost for this LNG project is understated and will be much higher,” Norlen said, adding that cost overruns include a variety of factors, such as regulatory risks and opposition.

During the past several months, Dominion’s proposed project has been a source of contention in Calvert County.

“If investors understand climate change is real, if investors understand how climate change hurts our neighbors close to home and around the world, if investors don’t feel right about profiting from an industry that injects gallons of ‘fracking’ chemicals into people’s drinking water, if investors understand that clean, renewable energy is the future for Maryland and for all of us, if investors are committed to be part of economic solutions to the problems we face, then they’ll know better than to try and spend their good money after this mammoth project,” Interfaith Power and Light (D.C., MD, VA) Director Joelle Novey said.

She said some investors have concluded that making money on such a project “just wouldn’t be right.”

CCAN Executive Director Mike Tidwell spoke during the teleconference of the opposition to the project in the county and across the state. He cited several town meetings in the county and CCAN’s “Maryland Crossroads 2013 Tour: Clean Energy, Not Cove Point!”

“The resistance to Cove Point is now arguably the hottest environmental issue in the state,” Tidwell said. “… Most people now across the state have heard of it. ... They know there’s controversy.”

A public campaign rally is scheduled for Jan. 8 before the Sierra Club Maryland Chapter’s appeal in court, he said. Earlier this year, a Calvert County Circuit Court judge ruled Dominion’s export project does not violate a 2005 agreement with environmental organizations, including the Sierra Club.

A rally is also scheduled for Feb. 20 in downtown Baltimore before the Maryland Public Service Commission — one of the permitting agencies for Dominion’s project — he said.

“So, to investors, I would just underline in summary, that this is a legally, highly uncertain project. It is morally objectionable and socially, highly controversial,” Tidwell said.

To view the report, go to