First U.S. east coast export facility is expected to enter commercial service in early March
Dominion Energy Cove Point (DECP, ticker: D) has begun producing liquefied natural gas. The company’s newly constructed natural gas liquefaction facility is undergoing commissioning in Lusby, MD.
When commissioning is complete, DECP will produce LNG for its customer joint venture ST Cove Point, a JV of Sumitomo Corporation and Tokyo Gas, and for GGULL, the U.S. affiliate of GAIL (India) LTD. The receiving companies are under 20-year take-or-pay contracts. DECP’s liquefaction facility has a nameplate capacity of 5.25 mtpa of LNG.
Shell NA LNG is providing the natural gas needed for liquefaction during the commissioning process and will off-take by ship the LNG that is produced.
Construction of the liquefaction facility began in October 2014, following more than three years of federal, state and local permit reviews and approvals. With a cost of $4 billion, it is the largest construction project ever thus far for Maryland, Dominion Energy said. Construction has involved more than 10,000 craft workers and a payroll of more than $565 million.
In the company’s Q4 conference call earlier this week, Dominion CEO Thomas Farrell said that Dominion expects earnings growth of at least 10% in 2018, driven by the completion of the Cove Point liquefaction project, and 6% to 8% growth from 2017 to 2020.
“Once commercial, our contracts become effective, and the project will produce the expected earnings we have previously discussed. However, as Mark mentioned, the absence of these earnings for the first two months of the year will offset some of the earnings benefits expected from lower income taxes. Nevertheless, we still expect 2018 earnings to be at least 10% above the midpoint of last year’s guidance.”
