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Cove Point natural gas export facility gets state OK

Dominion ordered to pay $48 million toward clean energy, bill assistance

By Timothy B. Wheeler, The Baltimore Sun

8:56 PM EDT, May 30, 2014

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A proposed natural gas export facility in Southern Maryland moved closer to reality Friday, but state regulators ordered the terminal's owner to include more safety and environmental protections for the controversial project, and to donate $48 million to promote clean energy in the state and to help low-income Marylanders pay their power bills.

The Maryland Public Service Commission authorized Dominion, an energy company based in Richmond, Va., to build a 130-megawatt generating station at its existing Lusby import terminal. The plant would provide the power needed to compress natural gas into a superchilled liquid for loading onto tankers docked in the Chesapeake Bay.

But the state regulatory body imposed 179 conditions on its approval, covering items that include air and water quality, traffic, noise and forest conservation at the site.

The commission also declared that the export terminal would not provide net benefits to state residents, so it required Dominion to contribute to programs that would "advance and protect" the environmental and economic interests of Marylanders.

It ordered the company to donate $40 million over five years to state efforts to develop renewable energy, reduce climate-altering pollution and promote energy efficiency. The company also is required to give $8 million over 20 years to a state fund that provides low-income energy assistance.

Dominion has 10 days to inform the commission whether it accepts the conditions. But company spokesman Jim Norvelle said Dominion was pleased by the state approval and did not raise any concerns in a brief written statement issued after the commission's announcement.

"We are now reviewing the order," Norvelle said, "and look forward to working with the commission to meet the conditions so the project can continue to move forward in a timely manner."

Mike Tidwell, director of the Chesapeake Climate Action Network, expressed disappointment with the approval. He said $48 million was not enough compensation for all of the project's environmental and economic impacts. He said he and other opponents were "especially disappointed with the lack of true safety protections for the people of Calvert County."

Dominion wants to export up to 5.75 million metric tons of liquefied natural gas a year from Cove Point, which has seen only sporadic import activity in the nearly 40 years since it was built. The company expects to spend $3.8 billion to convert the terminal for exports, including construction of a gas liquefaction plant and the gas-fired power plant.

The project has strong support from local officials, who anticipate $40 million in additional tax revenue, and from business and trade groups, who say the construction will support thousands of jobs and the energy exports will help the economy.

But it has drawn fire from environmental groups and some Southern Marylanders, who contend that the energy facility poses safety risks and would increase emissions of climate-warming greenhouse gases.

About 80 people spoke for and against the project at a March public hearing in Lusby, and the commission said it received more than 60,000 written comments.

The state's conditional approval comes two weeks after the Federal Energy Regulatory Commission gave the project a conditional green light. The federal panel's environmental assessment found that with a host of relatively minor modifications, the export facility posed no significant risks to nearby residents or the environment.

The FERC, which has yet to approve the project, is scheduled to have a public hearing on its staff's assessment from 1 p.m. to 6 p.m. Saturday at Patuxent High School in Lusby.

In response to residents' concerns about safety, the Public Service Commission ordered Dominion to update its emergency response plan for the expanded facility and to help cover the associated costs of state and local agencies and emergency first responders who might be called to deal with any incident there.

Tidwell said it was clear that state commissioners were concerned about the potential for a fire and explosion at the facility to spread, but he said federal and state regulators have failed to require the company to quantify the off-site risks. Tidwell said opponents plan to urge Gov. Martin O'Malley to order a detailed risk assessment, as his Republican predecessor did for a smaller expansion of the terminal eight years ago.

Dominion contends that there's no threat to nearby residents, Tidwell said, but with houses within hundreds of feet of the facility, "if anything goes off site ... homes are going to be incinerated. They're just too close."

tim.wheeler@baltsun.com