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Report Says Dominion Cove Point LNG Facility Delayed Until March

Liquefied natural gas (LNG) exports from Dominion's Cove Point terminal on Chesapeake Bay will reportedly be delayed until March.

Bloomberg reported Wednesday that supplies aren't expected to start until April at the earliest. The report cited sources with knowledge of the situation, but asked not to be identified because they weren't authorized to make the information public.

"We still expect the facility to be declared commercial early this year, as we said last month," Dominion spokesman Chet Wade told Bloomberg. Dominion had originally expected to have the facility entered into service by the end of 2017.

Cove Point, located in Lusby, MD, has a nameplate capacity of 5.25 million metric tons/year (mmty) of LNG and would source gas from the Marcellus Shale.

Although Dominion has said construction at Cove Point is complete, Genscape Inc. analyst Jason Lord speculated that the delay may have been caused by the company working to install permanent upgrades to two ground flare systems at the facility.

"One thing that we've alluded to in our analysis is there's ongoing flare construction, and that's been something that we have identified as a potential delay," Lord told NGI. "That's an important factor. You need the flares to operate, of course, so until a permanent flare system is installed, you can't operate safely.

"They're looking to improve and install a permanent upgrade to both of those systems. It's better to get that done ahead of time and come online with all your ducks in a row, as compared to trying to force commercial operations to begin and then have to go back and maybe fix something."

Lord said Dominion "has been pretty quiet about everything so far." He added that a statement the company made last December announcing that it had introduced feed gas at the facility "was interesting because we didn't see corresponding nominations as a result. In fact, their pipeline nominations onto the Cove Point pipeline still represent send out."

Last month, an LNG tanker docked at Cove Point to assist with the commissioning process. The Federal Energy Regulatory Commission issued an authorization for Dominion to export LNG produced during commissioning activities via vessel in November [CP13-113].

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., as well as Gail (India) affiliate Gail Global (USA) LNG LLC, have each contracted for half of the marketed capacity. Sumitomo has agreements to serve Tokyo Gas Co. and Kansai Electric Power Co. Inc.

India's oil and gas minister said state-owned Gail has been trying to renegotiate its contract with Dominion. The company called the minister's claims a mischaracterization.

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