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It's Official: Cove Point Becomes Second U.S. Facility to Export LNG

History was made in the early hours of Friday with the departure of a liquefied natural gas (LNG) tanker owned by a subsidiary of Royal Dutch Shell plc from Dominion Energy’s export facility on Chesapeake Bay in Maryland.

According to reports, the Gemmata, a Singapore-flagged, G-Class tanker owned by Shell NA LNG, left the Dominion Energy Cove Point LNG LP terminal at Lusby, MD, early Friday. Dominion confirmed that the ship and its cargo, the first ever from Cove Point, had departed and final commissioning work was underway.

"Shell NA LNG is providing the natural gas needed for liquefaction during the commissioning process and is off-taking by ship the LNG that is produced," Dominion said.

Cove Point is the second U.S. facility to export LNG sourced from domestically produced natural gas in the Lower 48. Cheniere Energy Inc.'s Sabine Pass LNG terminal in Cameron Parish, LA, began exporting gas in February 2016.

Executive director Charlie Riedl of the Center for LNG (CLNG), said the first commissioned cargo from Cove Point marked an important day for the growing U.S. LNG industry.

"This is the second U.S. LNG export facility, the first on the East Coast, and one of many to come," Riedl said Friday. "The projects provide thousands of jobs at home and environmental and geopolitical benefits abroad. This cargo represents countless hours of work from thousands of people and $4 billion of investment, the largest construction investment in Maryland's history.

"The vast natural gas resources in the U.S. enable LNG exports to bring significant benefits to communities right here at home. As more LNG exports come online, those benefits will increase exponentially, in terms of job creation, investment and supply contracts across the whole natural gas supply chain."

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.

Last Monday, Shell issued a report that found LNG demand was strong in 2017, and it predicted LNG demand would increase at an average rate of 4%/year over the next 20 years. Shell also reported that 1,100 spot cargoes were delivered in 2017, a 17% increase from 2016 and equivalent to three cargoes delivered every day.

In December 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].

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.

In late January, the Sierra Club agreed to drop a lawsuit contesting approvals of LNG exports from four U.S. facilities, including Cove Point.

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