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.