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BP Seeks Expedited FERC Action in Remanded Cove Point LNG Capacity Case

BP Energy continued a long-running dispute with Dominion Cove Point LNG LP (DCP) Friday when it asked FERC to expedite action on a case recently remanded by the United States Court of Appeals and allow it to "turn back" import expansion storage and regasification capacity as the agency previously allowed another existing import customer.

BP's filing comes more than three years after Dominion filed an application at the Federal Energy Regulatory Commission seeking authorization to proceed with a liquefied natural gas (LNG) export facility in Calvert County, MD, and associated interstate natural gas pipeline facilities (see Daily GPIApril 2, 2013). The export facility was to have a marketed capacity of up to 5.75 million metric tons per annum, the subsidiary of Richmond, VA-based Dominion said at the time. DCP received no requests during a pair of open seasons, according to BP, and instead "...negotiated an early termination of Statoil Natural Gas LLC's Cove Point expansion agreements on a bilateral basis."

Just weeks after Dominion filed its application, BP and Shell NA LNG LLC filed protests, citing concerns that it could degrade services to DCP's existing import customers and that the company was showing unduly preferential treatment to certain customers (see Daily GPIMay 8, 2013). BP urged the Commission to "rectify consequences of unduly preferential conduct" by DCP when it allegedly provided Statoil, an existing import customer, a unique opportunity to turn back its import expansion storage and regasification capacity, while denying BP, a similarly situated customer, the same opportunity.

FERC denied BP's protest, finding that the company and Statoil were not similarly situated, and BP turned to the courts for a review of the Commission's order [CP13-113]. The United States Court of Appeals for The District of Columbia Circuit said in July that BP's petition for review would be remanded to FERC "for further explanation," and issued a formal mandate of that decision last month [BP Energy Company v. FERC, No. 15-1205].

The court rejected arguments that BP lacked standing to challenge the order, rejected FERC's contention "that turn back rights were not a term or condition of service at a facility within the scope of Section 3(e)(4) of the NGA [Natural Gas Act]," and rejected FERC's argument that it "could justify its holding solely because Statoil received service under Section 3 and BP received service under Section 7," BP said.

BP asked FERC to grant relief effective Jan. 1, 2017, to coincide with the proposed effective date for the earliest Statoil turn back. A proportional turn back right would be at least 190,000 Dth/d of BP's LTD-1 and FTS capacity, the company said.

FERC authorized DCP to construct its LNG export facility in Calvert County, MD and related facilities in Virginia, the first East Coast LNG project to receive the green light, in September 2014 (see Daily GPISept. 30, 2014). The U.S. Department of Energy approved DCP's application to export LNG to free-trade and non-free trade agreement countries in 2013 (see Daily GPISept. 12, 2013).

Dominion's plans at Cove Point have also been plagued by complaints by environmental groups (see Daily GPI,July 15).

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