Stakes are high for LNG export plan

LUSBY, Md. — Sixty miles from the nation’s capital, on the shores of Chesapeake Bay, seven massive natural gas tanks tower over white pipelines that snake into the sea.

Their destination is an offshore dock one mile from the coast, with two piers that jut like outstretched arms into the water, waiting for massive tankers to unload liquefied natural gas destined for customers along the East Coast.

But Richmond, Va.-based Dominion Resources now wants to turn its entire Cove Point operation around, reversing the flow so it can liquefy the natural gas now pouring out of Pennsylvania wells and load it onto tankers bound for India and Japan.

Dominion’s plan to expand the 40-year-old Cove Point LNG terminal is one of roughly two dozen similar ventures around the United States aimed at exploiting the current drilling boom and giving natural gas producers a crack at Asian markets hungry for the fossil fuel.

The company has said the gas liquefied at its Cove Point facility could come from fields across the United States — including wells as far away as Texas — though the Marcellus is a likely source. For the next two decades, the natural gas would go to Tokyo’s Sumitomo Corp. and New Delhi-based GAIL India.

Other project partners include Houston’s IHI E&C International Corp. and Omaha, Neb.-based Kiewit Corp.

Unlike the LNG export proposals in Louisiana, Texas and other states, the $3.8 billion Cove Point project is drawing intense opposition from environmentalists and nearby residents who have both local safety concerns and broader, ideological ones.

They view Cove Point as critical to driving demand for natural gas drilling in Pennsylvania and Ohio’s Marcellus Shale, just as the Keystone XL pipeline has been cast as essential to sustaining development of the Canadian oil sands.

“Cove Point is the gas industry’s identified access point for Marcellus shale gas to flow to the rest of the world,” said Mike Tidwell, director of the Chesapeake Climate Action Network, a Takoma Park, Md., group that has organized much of the opposition. “They’re going to have a hell of a time getting it out of anywhere else, so the stakes are really high.”

Tidwell calls the Cove Point opposition “the Keystone fight of the east.”

“KXL has bred a community in the mid-Atlantic, pre-positioned to fight exactly a proposal like Cove Point,” Tidwell added. “That culture has been developing for two years, since the KXL fight began.”

Related story: Manufacturers call for halt on natural gas export approvals

Hundreds of activists rallied last month in Baltimore against Dominion’s expansion plans, wearing shirts proclaiming “Clean Energy, not Cove Point,” and hoisting signs saying “Stop the Frack Attack.”

A week later, on Feb. 27, four Maryland residents were arrested during a protest at the entrance to a Maryland county courthouse.

Rally by activists

Cove Point is emerging as a major test of environmentalists’ ability to block — or seriously slow — midstream energy infrastructure projects in a bid to stop the oil and gas production happening upstream as well as the burning of those fossil fuels downstream.

“There clearly is a view from certain people that increased U.S. energy production is not a good thing and … there’s only so much carbon we can put in the atmosphere,” said Jason Bordoff, a former White House adviser who now heads Columbia University’s Center on Global Energy Policy. “The lesson they take from that is we have to do everything we can to keep fossil fuels in the ground.”

In September, the Energy Department gave Dominion a conditional license to export up to 770 million cubic feet per day of natural gas to India, Japan and other countries that don’t have free-trade agreements with the United States.

But the project still must clear a phalanx of other reviews, including assessments by the Federal Energy Regulatory Commission and Maryland’s Public Service Commission, which has authority over Dominion’s plan to construct a 130-megawatt power plant at the facility.

The company also aims to erect a 60-foot sound wall, build a facility for stripping impurities from natural gas and install a cryogenic heat exchanger designed to chill the fossil fuel to minus 260 degrees, transforming it into a liquid that can be loaded onto seagoing tankers.

Recycling all it can

Mike Frederick, Cove Point’s vice president of operations, stressed that Dominion is adding the new equipment within its existing 131-acre footprint and recycling everything it can, even down to the nitrogen that flashes off as the natural gas’ temperature drops.

“There’s no additional water that goes to the bay; it’s a fully recycled water process,” he said. “We’re recycling everything that’s possible in this process and a lot more than most would do.”

Dominion would add about 75 employees to the 100 already at Cove Point LNG once liquefaction operations began, a milestone the company hopes to reach in late 2017.

It would be a dramatic transformation for a facility that, at its peak, only saw 85 ships a year — far below the 200 authorized by federal regulators.

More in tax revenue

For now, there’s no hint of that activity out at Cove Point’s pier, accessible to workers and visitors by bicycling through a dimly lit 6- foot-diameter tunnel under the Chesapeake. On a recent visit, water lapped gently against the pier supports, birds flew through the fog and no ships were in sight.

That’s a fine scenario for some local residents, such as Tracey Eno, who has spent 17 years living in the shadow of Cove Point LNG and says she is “scared” and “angered” by the proposed expansion. A Pennsylvania native, Eno said she found home on the Chesapeake Bay, where she could indulge her love of swimming, fishing and the water.

Then, Cove Point “was basically a sleeping giant,” Eno said. “Yes, they were importing gas, and yes, there’s some danger there, but the danger is magnified incredibly when they want to add all this … in a very small place.”

While other opponents live nearby, many residents in the wider community are excited by the prospect of an extra $40 million in annual property taxes over the next five years.

To help beef up local support, Dominion has mailed brochures to Calvert County residents to tout the project’s economic potential, held meetings to assuage safety concerns and poured LNG from thermoses in front of reporters to demonstrate how the substance behaves at room temperature.

‘We want to do it right’

“I live here. Our employees live here too,” Frederick says. “We want to do it right.”

Opponents want the Federal Energy Regulatory Commission to conduct a new environmental impact statement on the project — a broad, time-consuming review that would go well beyond the scope of the smaller required environmental assessment. They say the smaller assessment won’t sufficiently analyze how the new equipment and ship traffic would affect nearby wetlands, migrating birds and air quality.

But Frederick said he believes that’s just an attempt to “slow it down.”

“When you look at the national organizations (that oppose the project) I believe their argument is, ‘We should stop fracking, we should stop drilling,’?” Frederick said. “Not doing this facility won’t stop that one bit.”