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Cove Point LNG Construction Nearing Completion, In-Service Expected This Year, Says Dominion

The Cove Point liquefied natural gas (LNG) export facility on the Chesapeake Bay in Lusby, MD, is 95% complete, remains on-time and on-budget, with a commercial in-service date expected later this year, according to Dominion Energy Inc.

"Engineering and procurement is essentially finished," CEO Thomas Farrell said during a conference call with analysts Wednesday. "Structural steel and large diameter piping installation are coming to completion and the post-installation pipe testing is essentially complete. Both phases of the operator stimulation training have been successfully completed.

"Syncronization of a steam turbine generator to the existing plant generation grid will be completed this month. Over 90% of the project systems are now in the commissioning phase, in line with our schedule."

Cove Point has authorization from FERC for hydrocarbon entry into four additional project areas and from the Department of Energy to export LNG produced during commissioning, Farrell said.

"We have an agreement with a third-party to provide the commissioning natural gas and to export commissioning LNG from the facility," he said. Dominion did not identify the third party.

The liquefaction project's marketed capacity is fully subscribed under 20-year service agreements. Pacific Summit Energy LLC, a U.S. affiliate of Japan's Sumitomo Corp.; and GAIL Global (USA) LNG LLC, a U.S. affiliate of GAIL (India) Ltd., each have contracted for half of the marketed capacity. Sumitomo has said it has agreements to serve Tokyo Gas Co. and Kansai Electric Power Co. Inc.

Once the export project is complete, the facility would be bidirectional, offering import and export capability. The export facility is expected to source natural gas from the Marcellus Shale with capacity to handle 750 MMcf/d.

Cove Point would be the first LNG export facility on the U.S. East Coast and only the second in the Lower 48 states behind Cheniere Energy Partners' Sabine Pass LNG terminal in Louisiana.

The Atlantic Coast Pipeline (ACP), which is being developed through a joint venture with Duke Energy, Piedmont Natural Gas and Southern Company Gas, and the related Supply Header Project, received a favorable final environmental impact statement from the Federal Energy Regulatory Commission last month. Dominion expects to receive a final certificate from FERC in early fall, Farrell said.

"ACP and Supply Header have essentially completed the design and engineering, executed the construction contract and completed over 84% of materials procurement,” he said. “We remain on track to start construction later this year, and expect completion of the Atlantic Coast Pipeline and the Supply Header in the second half of 2019.”

Dominion has more than $750 million invested in seven other pipeline growth projects and is investing nearly $300 million annually in infrastructure replacement programs through its local gas distribution companies.

Dominion reported 2Q2017 earnings of $390 million (62 cents/share) on revenue of $2.81 billion, compared with $452 million (73 cents) on revenue of $2.6 billion in 2Q2016. 

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