After lying dormant for 14 years, the $370 million liquefied natural gas terminal in Cove Point has received the green light from federal regulators and is scheduled to reopen in September 1995.
But the terminal, built to receive liquefied gas from Algeria, initially will serve as a gas storage depot that can be drawn on by utilities during peak demand periods, the Calvert County terminal's owners said yesterday.
"It's going to be a few years, it would be my guess, until we have any LNG imported into the terminal," said L. Michael Bridges, chairman of Cove Point LNG Limited Partnership.
Built at the height of the natural gas shortage of the late 1970s, the terminal was in operation for only a little over two years before being shut down in December 1980 because of a pricing dispute with the Algerian government.
Since then, the plant's four white storage tanks, capable of holding 5 billion cubic feet of gas, have remained empty -- resistant to various plans to restart the facility.
But last week the Federal Energy Regulatory Commission approved the plan to use the terminal as a storage facility, and Cove Point LNG accepted the approval on Monday, Mr. Bridges said.
Cove Point LNG, which will operate the terminal, is a 50-50 partnership between Columbia LNG Corp. and Potomac Electric Power Co. (Pepco), the electric utility serving Washington and its Maryland suburbs.
Columbia LNG is 90 percent owned by Columbia Gas System Inc. and 10 percent by Shell Oil Co. Columbia LNG is not part of Columbia Gas System's Chapter 11 bankruptcy proceedings.
Under the partnership agreement, Columbia LNG will provide the terminal and Pepco will supply $25 million to upgrade the facility. Improvements above $25 million will be paid by Columbia LNG, said Mr. Bridges, who also is president of Columbia LNG.
The partnership will spend $10 million to refurbish shore facilities and $16 million to build a liquefaction unit. The work force at the plant, which now stands at 11, will increase to 25 when operations begin.
Six gas utilities, including the Washington Gas Light Co., which supplies Washington, Southern Maryland and Northern Virginia, have already contracted to use the terminal, Mr. Bridges said. Those users will account for one-quarter of the terminal's total daily output capacity of a billion cubic feet a day.
Baltimore Gas and Electric Co. is not a customer, but there have been discussions with the utility, Mr. Bridges said.