Dominion’s Cove Point LNG export plant awarded official “Authorization to Commence Service” by FERC
After a journey of more than seven years, on Mar. 5, 2018, the Federal Energy Regulatory Commission issued a letter to Dominion Energy (ticker: D) that culminated three quarters of a decade of proposing, meeting, permitting, constructing, testing—and waiting. The timing is good. Cove Point’s official green light came on a week when Shell and some others are predicting a supply shortage of LNG within two years.
Monday’s letter from Rich McGuire, Director Division of Gas – Environment and Engineering at FERC, contained the magic words needed to chisel the Cove Point Lusby, Maryland, natural gas liquefaction and export facility into the U.S. energy industry record books: “Authorization to Commence Service”.
“I grant Dominion Energy Cove Point LNG, LP’s (Dominion) March 2, 2018 request to commence service of both the Virginia and Maryland facilities for the Cove Point Liquefaction Project,” the letter from FERC reads.
“Your request is in compliance with Environmental Condition 12 of the Commission’s September 29, 2014 Order Granting Section 3 and Section 7 Authorizations (Order), in the above-referenced docket. Based on Commission staff inspections and review of the commissioning activities, Dominion has demonstrated that the above-mentioned facilities have been constructed in accordance with Commission approval and applicable standards and can be expected to operate safely as designed. Further, based on Commission staff inspections, I note that project areas within the Virginia and Maryland facilities have been satisfactorily stabilized and are in compliance with the terms of the Order,” the letter reads.
Cove Point is located on the Chesapeake Bay in Maryland. The $4 billion Cove Point export project began construction in October 2014. But research, planning, design and permitting to go into the liquefaction business began more than seven years ago—two years before Dominion filed its 12,000-page application with FERC, seeking authorization for the Cove Point liquefaction project. Dominion said Cove Point is its largest construction project to date, with a payroll of $565 million.
Now fully tested, commissioned, licensed and approved, Dominion Energy Cove Point officially becomes the U.S.’s second operational LNG export facility in recent years.
Cheniere Energy’s Sabine Pass facility on the Gulf coast has a two year head start on Cove Point, as the first U.S. LNG exporter, but Cove Point finally reached the point of loading and shipping its first cargo, a commissioning cargo, last week.
Cove Point gives direct access to export the natural gas produced in the Marcellus and Utica plays in Appalachia. It puts the natural gas from two of the most prolific natural gas basins in North America within a tanker’s journey of Europe and Asia, two of the world’s largest markets for natural gas.
Cove Point is designed to process an average of 750 million standard cubic feet per day of inlet feed gas, according to Dominion. The project was designed with one LNG train with a design nameplate outlet capacity of 5.25 Mtpa. Under normal operating conditions and after accounting for maintenance downtime and other losses, the firm contracted capacity for LNG loading onto ships, will be approximately 4.6 Mtpa (0.66 Bcfe/d), according to Dominion. Cove Point has authorization from the United States Department of Energy to export up to 0.77 Bcfe/d (approximately 5.75 Mtpa) the company said.
Cheniere was first to take U.S. natural gas to overseas markets with Sabine Pass, now expanding with more trains
Cheniere’s Sabine Pass export plant was the first modern day U.S. exporter of natural gas via LNG tanker and it has been exporting natural gas in the form of LNG since early 2016. Lately it has been ramping up exports and is in process of expanding its export capacity. Cheniere says that its Sabine Pass site can readily accommodate up to six liquefaction trains capable of processing over 3.5 Bcf/d of natural gas. The production capacity of each LNG train is being designed for approximately 4.5 mtpa.
With the ramp up of Train 3, and the onset of Train 4, feedgas volumes to Sabine Pass have nearly doubled compared with this time a year ago, according to Platts. “Over the course of the winter season thus far, feedgas volumes have averaged 2.9 Bcf/d, getting as high as 3.3 Bcf/d, which represents full utilization of the facility,” Platts Analytics data showed. Cheniere shipped its 100th cargo a year ago.
For Cove Point, Dominion Energy said it has fully subscribed the marketed capacity of the project with signed 20-year terminal service agreements. Pacific Summit Energy, LLC, a U.S. affiliate of Japanese trading company Sumitomo Corporation, and GAIL Global (USA) LNG LLC, a U.S. affiliate of GAIL (India) Ltd., have each contracted for half of the marketed capacity.
The end of a long road
What does it take to get an LNG export project up and running? Here are Dominion’s first three years of work starting with the idea to add liquefaction to its existing import capacity at Cove Point.
DOMINION COVE POINT EXPORT PROJECT TIMELINE: JAN. 2011 – JAN. 2014
Jan. 28, 2011 — Dominion Chairman, President and CEO Tom Farrell makes initial remarks during the 2010 4th quarter earnings call that Dominion is going to explore liquefaction of natural gas at Cove Point.
Sept. 1, 2011 – Dominion applies to U.S. Department of Energy (DOE) for permission to export LNG to countries that have Free Trade Agreements (FTA) with the United States.
Oct. 3, 2011 – Dominion applies to DOE for permission to export LNG to countries that do not have Free Trade Agreements (non-FTA) with the United States.
Oct. 7, 2011 – Dominion receives authorization from the DOE to export LNG to FTA countries.
Third Quarter 2011 – Dominion started contacting stakeholders, including federal, state, county, and local agencies in the project area with permitting requirements.
March 11, 2012 – Dominion meets with national and Maryland Chapter of the Sierra Club officials to discuss the possible need to amend the Dominion Cove Point conservation agreement to allow for the use of a portion of lands outside of the terminal area.
April 10, 2012 – Dominion meets with Maryland Conservation Council officers on the preliminary site plans for LNG export. (In April and May, several other meetings occur among Dominion and state and national environmental organizations on preliminary plans for the Cove Point export project and continuation of existing conservation agreement.)
May 2012 – Letters sent to the United States Army Corps of Engineers, U.S. Fish and Wildlife Service, National Marine Fisheries Service, Federal Aviation Administration, U.S. Coast Guard, U.S. Department of Defense, U.S. Department of Energy, Natural Resources Conservation Service, Maryland Department of the Environment, Maryland Department of Natural Resources, Maryland Historical Trust, Maryland Public Service Commission, and Maryland State Highway Administration. Dominion explained its intent to use the Federal Energy Regulatory Commission’s (FERC’s) Pre-filing Process for this project and asked these agencies to participate in the process.
May 18, 2012 – Dominion files a lawsuit to confirm its right to construct a natural gas liquefaction and export project at Cove Point. The company asks a Maryland court for declaratory judgment in response to a claim by the Sierra Club that it has the authority to block the project through the existing conservation easement.
June 1, 2012 – Dominion submits a request to initiate the Pre-filing Process with the FERC for a liquefaction project at Cove Point.
June 2012 – Dominion sends out a project newsletter to stakeholders with project updates.
June 26, 2012 – FERC grants Dominion’s request to utilize the Pre-Filing Process.
June 27, 2012 – Dominion sends out stakeholder letters describing the project.
July 18, 2012 – Dominion sponsors an open house in Southern Maryland at the Holiday Inn to introduce the project to its Cove Point Terminal neighbors and stakeholders.
September 24, 2012 – FERC issues the Notice of Intent to Prepare an Environmental Assessment for the Planned Cove Point Liquefaction Project, Request for Comments on Environmental Issues, Notice of OnSite Environmental Review, and Notice of Public Scoping Meetings, which opened the 30-day scoping comment period to gather input from the public and interested agencies on the Project.
Oct. 9, 2012 – FERC sponsors a scoping meeting at Patuxent High School to take comments on the record on the project and on the scope of the environmental analysis being prepared. Supporters and opponents of the project spoke, including the president of the Maryland chapter of the Sierra Club and local citizens.
November and December 2012 – Dominion submits draft environmental Resource Reports for the project.
Jan. 4, 2013 – Maryland court confirms Dominion’s right to build liquefaction and export facilities at Cove Point. Sierra Club appeals decision to the Maryland Court of Appeals.
Feb. 2013 – FERC issues a project update and explains next steps in the FERC process.
April 1, 2013 – Dominion files its 12,000-page application with the FERC, seeking authorization for the Cove Point liquefaction project.
April 1, 2013 – Dominion files its application for a Certificate of Public Convenience and Necessity (CPCN) from the Maryland Public Service Commission for the natural gas-fired power block for the Cove Point export project. Evidentiary hearings are scheduled for Feb. 20-21, 2014, in Baltimore and a public hearing in Calvert County for March 1, 2014.
April 2013 – Dominion publishes notices in the local newspaper notifying the public of the filing of the FERC application.
April 14, 2013 – FERC issues a Notice of Application, opening the comment period for any person wishing to obtain legal status by becoming a party to the proceeding for the project or to participate in the proceeding by submitting comments in support of or in opposition to the project. April 16, 2013 – Dominion sends project update letters to stakeholders.
Sept. 11, 2013 – Dominion receives authorization from the DOE to export LNG to non-FTA countries.
October 2013 – The FERC issues an update on Dominion’s application, providing the recent activity, next steps, issues identified to date, where FERC is in the environmental review process, and how the public can stay informed.
Jan. 8, 2014 – Maryland Court of Appeals hears oral arguments in the Sierra Club’s appeal of ruling that the conservation agreement does not prohibit Dominion from exporting LNG from Cove Point.
