Federal approval of a much-debated liquefied natural gas export facility in Maryland sends a signal for more drilling in Appalachia that the industry began celebrating Tuesday and environmental groups met with more opposition.
Dominion Energy’s Cove Point project will allow an outlet for LNG exports closer to the booming Marcellus and Utica shale fields, more than any terminal on the drawing board.
If Richmond, Va.-based Dominion accepts federal guidelines for the project, it would reverse flow on a terminal built to import natural gas before shale-gas drilling flooded the U.S. market.
The Federal Energy Regulatory Commission late Monday ended a two-year review by authorizing Dominion to begin constructing the $3.8 billion retrofit of the export facility. The company has 20-year agreements to ship LNG to Japan and India and hopes to start doing so in 2017.
The approval strengthens a move toward exports that has been building for several years, said Kent Moors, executive chair of the World Affairs Council of Pittsburgh’s global energy symposium.
“There’s really no surprise to this. … There was always the presumption that you’re going to have exports from the East Coast and from the West Coast,” he said. “Cove Point will be a major draw off of production surplus from the Marcellus. It will justify additional drilling.”
Cove Point is the fourth LNG export terminal the government has approved but the only project outside the Gulf of Mexico.
“This approval is fantastic and long overdue news for our region’s economy as well as our nation’s competitiveness and energy security,” said David Spigelmyer, president of the Marcellus Shale Coalition. “Thanks to safe shale development, America’s energy outlook has dramatically shifted from scarcity and weakness to abundance and strength.”
More shale development concerns environmental groups that have pushed back against expansion of gas drilling and that worry about the terminal’s impact on the Chesapeake Bay.
“If this is built, Calvert County residents get the raw end of the deal, in terms of air pollution,” said Tracy Eno, of Calvert Citizens for A Healthy Community.
Groups including the Sierra Club, Earthjustice and the Chesapeake Climate Action Network plan to challenge the decision in court if Dominion proceeds.
Dominion said the project would require no more pipelines or storage tanks at the 131-acre site in Lusby, on the western shore of the Chesapeake Bay. That doesn’t mean that it will be a simple project, said Jocelyn D’Ambrosio, associate attorney with New York-based Earthjustice.
“There’s a lot of infrastructure that’s going to go into it,” she said. “Storing chemicals really close together, should there be a failure of one tank, that could have a substantial ripple effect.”
The regulatory commission released an environmental study in May that found the project would not harm the environment. Critics said the report relied on outdated safety standards and did not consider the impact of increased widespread hydraulic fracturing in the Northeast.
Part of the debate about exports is prices. Moors said exporting LNG will not affect domestic gas prices because there’s enough gas to meet demand here and abroad. Not everyone agrees.
“At the end of the day, these producers will chase the highest price,” said John Quigley, a consultant dealing with shale energy issues and former secretary of Pennsylvania’s Department of Conservation and Natural Resources. “That’s what they’re going to go after. That’s why, ultimately, we’re going to get some level of domestic price impacts on manufacturing.”
David Conti and Katelyn Ferral are Trib Total Media staff writers. Reach Conti at 412-388-5802 or email@example.com and Ferral at 412-380-5627 or firstname.lastname@example.org.