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FERC Approves Cove Point LNG

FERC approves Cove Point Lng export facility with an expected capacity of 5.75 million metric tons of liquefied natural gas per year. Dominion Cove Point LNG, LP (“Dominion”) is a Twitter favorite. This project application has given life and infamy to the #CovePoint search criteria on Twitter. Energy gurus to ardent environmentalists have weighed in on the social media platform, whether it is a quick two cents or an admonishment of the FERC proceeding. I am not going to publish or give fame to any tweet in particular, but if you want a few moments of entertainment search “#CovePoint” on Twitter.

Now, back to the law…on April 1, 2013, Dominion filed an application for authority under Section 3 of the Natural Gas Act (“NGA”) and Part 153 of the Commission’s regulations to site, construct, and operate facilities for the liquefaction and export of natural gas at Dominion’s existing LNG terminal in Calvert County, Maryland. Section 3 of the NGA provides that “no person shall export any natural gas from the United States to a foreign country or import any natural gas from a foreign country without first having secured an order of the Commission authorizing it to do so.” Section 3 also provides that an Lng Export application shall be approved if it is not “inconsistent with the public interest…and upon such terms and conditions as the Commission may find necessary or appropriate.” FERC’s decision outlines how the Department of Energy conditionally granted Dominion long-term authorization to export LNG, finding “substantial evidence of economic and other public benefits.” DOE determined that the exportation of LNG may benefit the U.S. economy and diversify international supply options, thus improving energy security for U.S. allies and trading partners.

FERC has authorized Dominion to liquefy domestically-produced natural gas for loading onto LNG export vessels. Dominion intends to operate a liquefaction train, which shall contain gas turbine refrigerant compressors, draft air coolers, process vessels, pumps, and heat exchangers for liquefying natural gas. An existing underwater tunnel connects the current facility with an off-shore pier, which will serve as a loading dock for the LNG export. The facility will be located on 59.5 acres within a 1,000 acre parcel currently owned by Dominion. Dominion is contracted to service export customers for periods of up to twenty years.

Intervening parties during the FERC proceeding issued a wide array of comments regarding FERC’s environmental analysis of the proposed project. Apparently, the proposed liquefaction train is to be built on a stretch of land that is nestled over the subterranean formation known as the Moran Landing Fault. Some commenters warned that the constant vibration from the LNG facility’s steam generators would trigger an earthquake. The Environmental Assessment (“EA”) indicated that any geological challenges can be mitigated through effective and precise engineering design. FERC reproached the idea of an earthquake citing insufficient evidence.

The Commission received comments regarding the visual impact of the LNG facility. FERC noted how a landscaping plan and lighting distribution plan will reduce visual impacts associated with the facility’s operation. Several commenters issued reservations regarding the approval of the project because of the presumption that it may negatively affect surrounding property values. FERC reasoned that “[a] project’s impact on land values depends on many factors, including the entire project size, the existence of other energy projects and infrastructure, the current value of the land, and current land use. Each potential purchaser will have varying criteria, considerations, and capabilities for purchasing land and the addition of liquefaction facilities to an existing LNG terminal, especially when not visible to the surrounding community, may be irrelevant to a prospective purchaser.” After a review of the comments and filings made by surrounding landowners FERC determined that the project should not result in a significant impact on nearby property values.

Many environmental and policy organizations expressed concern to how the project’s driven purpose to export fossil fuels ignores the ominous challenges posed by climate change. The Commission dismissed the commenters’ presentations on hypothetical methane leakage. FERC also refuted commenter arguments that the LNG facility will harm the renewable energy market in the U.S., calling such arguments speculative. The theory behind the commenters’ argument is that export of natural gas may undermine investor interest in renewable energy projects.

Setting all other arguments aside, FERC concluded that the Cove Point LNG Export Facility will not have a significant impact on the quality of the human environment, thus determining that an environmental impact statement is not required. While #CovePoint continues to trend on Twitter, Dominion is authorized to begin construction. The facility’s export of domestically-produced natural gas is set to go into service by June 2017. For more information regarding FERC’s decision and detail far greater than any Tweet can provide, reference FERC’s decision in its entirety here. For other articles on proposed LNG projects visit FERCblog’s recent blog post on Alaska LNG.

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FERC Approves Cove Point LNG


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