On a cold, rainy day this week, officials with Dominion led a small media tour of the Cove Point facility, where it hopes to begin exporting liquefied natural gas by late 2017.
Just a 90-minute drive from Washington, DC, the facility has become a key piece in the ongoing debate over US LNG exports, drawing both praise as a viable, new avenue to get Marcellus Shale gas to Asian markets and criticism from environmental and community groups hoping to delay the project and ultimately shut it down.
Since many of you may not have the opportunity to tour the facility, I thought I’d share some photos (apologies in advance for the cell-phone quality) from the tour and some background on, arguably, the most contentious US LNG project pending before federal regulators.
The Cove Point facility was originally constructed in the late 1970s and, for decades, served as an LNG import facility. But outside of this Dominion sign and a peek of some of the mammoth storage tanks inside the facility, there’s no real indication that you’ve arrived at a hub of global gas trade. To me, it seemed like arriving at any other unremarkable office park and, unless I was specifically looking for the facility, I might have continued driving along Cove Point Road without ever noticing it.
When you actually get inside the facility, however, it’s a different story. The seven storage tanks are massive and tower over the pipelines, buildings and transfer lines throughout the 131-acres of fenced-in property. Once I got over the sheer size of the tanks, I also noticed how quiet the facility was, with only a scattering of employees working. This is likely due to the fact that the facility really only imports gas now for routine maintenance and is still a few years from exporting anything yet. There are only 100 employees at the facility now and only 75 are expected to be added once Cove Point starts exporting LNG.
This is Michael Gardner, Dominion’s manager of LNG operations, giving an overview of the liquefaction facilities the company plans to build at the facility, allowing them to treat feed gas, expected to come from the Marcellus Shale, cool it to minus-260 degree Fahrenheit, and then transfer it as a liquid to its offshore pier and on to vessels bound for India and Japan. Construction of the pre-treatment, power production and liquefaction facilities are expected to take at least three years, cost between $3.4 and $3.8 billion and includes construction of a 60 foot wall needed to comply with state noise regulations.
The Cove Point facility has drawn more opposition from environmental and community groups than any other proposed LNG export facility in the US, largely due to its proximity to Washington, DC and the likelihood that it’ll be the only facility of its kind in the mid-Atlantic region. During the tour, Dominion officials stressed the limited environmental impact the project would have since it would be built in the facility’s existing footprint, the benefits of displacing coal use in India with natural gas and the relative safety posed by LNG.
In the picture above, John Marconyak, a senior LNG technician with Dominion, demonstrated the impacts of an LNG spill. Environmental groups and some lawmakers have pushed the Federal Energy Regulatory Commission to require an Environmental Impact Statement for the project, a more detailed, costly and time-consuming review than the Environmental Assessment expected for the project. Dominion officials claim such a review is unnecessary, pointing to the 21,000 pages of documents the company has already submitted to FERC on the project. “The review is thorough,” said Michael Frederick, Dominion’s vice president of LNG operations. “My opinion, quite frankly, many of the people saying there’s not enough detail, there only desire is to slow it down.”
Despite its high price tag and extensive regulatory approval process, Dominion officials stressed how limited the changes to make the import facility an export facility will be. The project does not include any new transfer lines, storage tanks or pipelines, for example. The impact of the project will be “very minimal, we’re using what we’re already allowed to use,” Frederick told reporters. “We’ve contemplated that design very thoroughly and I think what we’re building is reasonable.”
The export project will also use the same offshore pier where tankers will be unloaded. The tanker is accessible by Dominion employees through a concrete tunnel beneath the Chesapeake Bay, a compromise between the project’s original developers and environmentalists at the time. The tunnel is accessible only by bicycle. Frederick (pictured above on the offshore pier) said that Dominion is currently authorized by the Coast Guard and FERC to have more than 200 vessels utilize the facility per year, but expects to have roughly 85 per year once the export operations begin, about the same it had when the facility’s import functions were at its peak.
In September, the Department of Energy approved Dominion’s application to ship 0.77 Bcf/d to countries that do not have free trade agreements with the US, following up a previous approval to ship 1 Bcf/d to countries that have FTAs with the US. Dominion has signed 20-year terminal service agreements with Pacific Energy Summit, a US affiliate of Japan’s Sumitomo, and GAIL Global (USA) LNG, the US unit of GAIL (India). Each company has agreed to take half of the export terminal’s planned capacity.
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