Pennsylvania

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DOE Approves Proposal To Export Marcellus LNG From Dominion Facility

Liquefied natural gas pipes run under the loading pier and along a mile long tunnel under the Chesapeake Bay to the onshore facility at Cove Point.

Lindsay Lazarski / WHYY/Newsworks

Liquefied natural gas pipes run under the loading pier and along a mile long tunnel under the Chesapeake Bay to the onshore facility at Cove Point.

This article has been updated with a response to the decision from America’s Energy Advantage. 

Marcellus shale gas is now well on its way to changing the global energy market.

The Department of Energy today approved a proposal to convert Dominion Resource’s Cove Point, Maryland import terminal into an export facility for liquefied natural gas.

The terminal is already connected to an interstate pipeline system that draws from wells in Pennsylvania that is also owned and operated by Dominion.

“The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country,” the DOE wrote in a press release. Read the full release here.

Dominion says it’ll cost $4 billion to convert the Cove Point facility to cool natural gas to its liquid form so it can be exported. The company already has two customers lined up - Japanese trading company Sumitomo Corporation and GAIL of India. The DOE is required to approve any deals with non-free-trade countries and make sure they’re in the public’s best interest.

The Energy Information Administration has predicted that the development of domestic natural gas won’t be slowing down any time soon. In Pennsylvania, “we have way more gas than we have things to do with it,” as Bill Hall puts it.

Hall is Director of the Shale Gas Commercialization and Innovation Center and he said today’s approval of the Cove Point export facility is “huge.”

“To be able to be in a position to increase those exports in a first-mover way, is really significant. A big thing for the Marcellus and a big thing for the United States of America,” Hall told StateImpact in an interview.

The high production of natural gas in Pennsylvania has produced a glut which has caused prices to drop and drilling to slow down in some of the state’s gas fields. Hall said exporting Marcellus LNGs could stabilize the market.

But not everyone is rejoicing today’s announcement.

Environmentalists have criticized Dominion’s proposal because it would mean continued drilling in Pennsylvania.

The manufacturing industry has also been lobbying with fervor against LNG exports. Companies like Dow Chemical that use cheap natural gas to make plastics claim the bargain-basement prices are what’s putting manufacturing back in business and keeping costs low for their customers.

America’s Energy Advantage, a lobbying firm started by Dow CEO Andrew Liveris, released a statement criticizing the DOE’s decision.

“We’re increasingly concerned with the process and data DOE is using to justify more exports of American natural gas to our global competitors,” AEA’s Director of Public Affairs Jennifer Diggins wrote. “DOE is making decisions that could have far-reaching and potentially irreversible impacts on our economy and American manufacturing based on 30-year-old guidelines for natural gas imports, not exports.”

The Cove Point facility still needs to be approved by the Federal Energy Regulatory Commission before it can come online.

This article was corrected to reflect that the cost to convert the Cove Point facility is actually $4 billion which will ultimately be financed by two oversees customers – Sumitomo Corporation and GAIL of India. 

Comments

  • davidmeiser

    Sierra Club Statement on Conditional Authorization of LNG Exports from Cove Point, MD

    WASHINGTON, D.C. — This afternoon, the Department of Energy announced conditional approval for Dominion’s Cove Point, Maryland facility to export liquefied natural gas.

    In response Deb Nardone, director of the Sierra Club’s Beyond Natural Gas Campaign, released the following statement:

    “With the Department of Energy (DOE) today conditionally authorizing Dominion Resources to export gas from a liquefied natural gas terminal in Cove Point, Maryland, it is deeply disappointing to see that Secretary 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. The economic study the DOE itself commissioned clearly states that LNG export will transfer wealth from wage earners to fossil fuel executives. LNG export is nothing but a giveaway to the dirty fossil fuel industry, at the expense of everyday Americans.

    “Exporting LNG to foreign buyers will lock us into decades-long contracts, which in turn will lead to more drilling — and that means more fracking, more air and water pollution, and more climate-fueled weather disasters like record fires, droughts, and superstorms like last year’s Sandy. And all this when we know that the dangers of natural gas will only become more clear as we learn more about its effects on health and the climate.

    “As we have shown, once environmental impacts are evaluated, it becomes clear that the additional fracking and gas production exports would induce is unacceptable. DOE did not consider these impacts or any other impacts in today’s conditional authorization. Instead, DOE is basing its decision on environmental reviews that the Federal Energy Regulatory Commission has yet to conduct. When these environmental impacts are considered, it is clear that natural gas needs to stay in the ground, and the administration needs to double down on clean energy like wind and solar that would protect us from the worst effects of climate disruption while putting Americans to work.

    “The Sierra Club has been granted party status in this docket, and will hold DOE to its commitment to fully review environmental issues before deciding whether to issue final authorization. We will also monitor all other permits and approvals that the Cove Point Facility will require, and will take action as necessary. Additionally, Sierra Club continues to seek enforcement of a decades-old agreement between the Sierra Club and Dominion Cove Point LNG which clearly prohibits expansion of this facility to allow for exports. The Sierra Club intends to hold Dominion accountable for complying with the commitments it made to protect the Cove Point environment.”

    • Vera Scroggins

      thanks, Sierra Club , for monitoring this latest action and for your strong statements about the unacceptability of exporting gas .

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