LNG import terminal at Cove Point mostly idle these days

Dominion's Cove Point LNG terminal near Lusby would be upgraded and expanded to liquefy and export natural gas if the project gains federal approval. (Barbara Haddock Taylor / December 5, 2012)

A new study predicts that exporting the nation's cheap, seemingly abundant supplies of natural gas will boost the U.S. economy, giving a nudge to prospects for shipping liquefied fuel abroad from a nearly idle terminal in the Chesapeake Bay.

The report, commissioned by the Department of Energy, finds that the economic benefits gained from exporting liquefied natural gas, or LNG, outweigh the impact that higher domestic fuel prices may have on households and businesses.

Federal energy officials had been waiting for the analysis by NERA Economic Consulting before deciding 15 pending applications to export LNG from terminals along the Gulf and East coasts.  The agency said in a statement that economic iimpact is one of the factors it must weigh in deciding whether to approve exports, though it also intends to consider energy security and environmental impacts.  DOE said it plans to take public comment on the report for 75 days after it is published in the Federal Register, and then to begin acting on the pending bids.

Dominion Energy spokesman Dan Donovan said the report aids the Richmond-based company's efforts to export LNG through its Chesapeake Bay terminal at Cove Point in Calvert County.  The Maryland terminal, now utilized only once or twice a year to import LNG, is roughly fourth in line to awaiting DOE review and the only proposed export point this far north on the East Coast, relatively close to shale gas fields in Appalachia and Ohio.

"We have the pipeline, we have the tanks and we have the dock," Donovan said. With plans to spend $2.5 billion building a gas liquefaction plant and upgrading the terminal, he added, the Cove Point project should provide jobs and economic benefits for Maryland and the entire mid-Atlantic region.

Some business and consumer groups have voiced concern that exporting natural gas would raise the price of the fuel in the United States, raising residential and business energy costs and hurting industries that depend on it for manufacturing.  The NERA report acknowledged that domestic gas prices could rise, depending on the amount of exports and the market in this country, but said those impacts would be more than offset by the income generated by selling abroad.

Some environmental groups also oppose LNG exports, and the Sierra Club in particular is contesting Dominion's plans to convert its Cove Point terminal from an import site to one for shipping LNG overseas. 

A Calvert County Circuit Court judge has yet to rule on whether Sierra has a right to block the project.  The environmental group opposes it in the belief that exporting LNG would spur more drilling for shale gas using a controversial technique called hydraulic fracturing, or "fracking."  Environmentalist contend fracking can pollute air and water, which the industry disputes. Most state regulators have sided with industry so far, though Maryland has not permitted any "fracking" for shale gas in its mountainous west as state officials study the potential environmental impacts.

“The law requires the Department of Energy to determine if more natural gas exports are in the public interest - so it is baffling that this report omits the serious threats increased fracking and gas production pose to our water, our air, and the health of our families,'' Sierra Club executive director Michael Brune said in a statement. "Even if we consider what’s actually included in this analysis, increased gas exports are expected to result in higher gas prices and lower wages for American families, meaning we pay the price here while the companies shipping gas overseas rake in the profits.”