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Analysts Say LNG Exports From Dominion's Cove Point Are Imminent

Analysts say liquefied natural gas (LNG) exports from Dominion's Cove Point terminal on Chesapeake Bay are imminent, as FERC prepares to make another inspection of the facility in Maryland this week.

During a panel discussion at the Weather & Price Tealeaves IV conference in Houston on Monday, IAF Advisors' Kyle Cooper, managing director of research, told the audience he expects Cove Point "might start shipping by November."

Eric Fell, senior natural gas analyst at Genscape Inc., added that based on internal data, Genscape expects Cove Point to begin shipping cargoes as soon October. But the facility would not be fully operational that month, as it would take "a couple of months to test cargoes and flows into the terminal."

"We have infrared monitoring at Cove Point," Fell said, adding that while Genscape has not seen nominations, it has seen "flares fire up a couple of times now. They've been short-lived. They are clearly testing," similar to what Genscape observed at Cheniere Energy Inc.'s LNG export facility in Sabine, TX.

Cheniere exported its first LNG cargo from Sabine Pass in February 2016. Earlier this month, the facility resumed loading cargo after more than a week of shut-ins in the aftermath of Hurricane Harvey. Analysts with IHS Markit reported at the time that LNG exports through Sabine Pass were expected to rebound from the storm.

"There has been off and on testing" at Cove Point, a sign that it is nearing startup, Fell said.

Karl Neddenien, a spokesman for Dominion Energy Cove Point LNG LP, told NGI on Monday that Cove Point will be completed in the fourth quarter, with an export capacity of 5.25 million metric tons per annum (mmtpa).

Inspectors with the Federal Energy Regulatory Commission [CP13-113] visited Cove Point last month. In a field inspection report filed last Wednesday, FERC said construction activities observed on Aug. 17 "comply with the designs and plans filed with and approved by FERC. The findings of the inspection were that no instances of noncompliance or problem areas were identified." FERC said the next construction inspection of the LNG terminal facilities was tentatively scheduled for this week.

Last month, Dominion filed a request for authorization from FERC to introduce hazardous fluids at Cove Point.

During Dominion's 2Q2017 earnings call, CEO Thomas Farrell said Cove Point was 95% complete, and that the project was on-time and on-budget. Farrell added that, at the time, more than 90% of the project's systems were in the commissioning phase.

"As we work toward commercial in-service later this year, we will bring the project to a state of ready for start-up this quarter, and construction will essentially reach complete status," Farrell said on Aug. 2.

Cove Point'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.

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