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FERC Affirms Cove Point LNG Did Not Cause Utility Leaks

FERC Thursday upheld a June order approving an expansion of Dominion Cove Point LNG LP's terminal in Calvert County, MD, and pipeline system, despite claims by Washington Gas Light Co. (WGL) that high-Btu LNG from the terminal caused widespread leaks on its distribution system in Prince Georges County, MD, in 2005.

The Federal Energy Regulatory Commission on rehearing affirmed its finding that WGL's claims were based on a "flawed analysis," and that other factors, such as the application of hot tar to the utility's seals as a means of corrosion control, the increase in operating pressures on WGL's system and colder temperatures were responsible for the leaks -- not the chemical composition of the LNG from the Cove Point terminal [CP05-130].

In 2005, WGL, a subsidiary of WGL Holdings Inc., identified approximately 1,400 gas leaks on its distribution system in a 100 square-mile area in Prince Georges County (see Daily GPI, May 18, 2005). The utility blamed the leaks, which at the time it estimated would cost $140 million to repair, on the LNG-sourced natural gas flowing from the Cove Point terminal.

"The record in this proceeding has established...that WGL's system would not have had an increase in leak rates after the introduction of regasified LNG if the sealing ability of WGL's couplings had not been compromised by other significant factors, namely hot tar, age, temperature and pressure," the FERC order said.

"After thoroughly considering the record evidence, we found that WGL's particular safety concerns do not change our conclusion that Cove Point's expansion project can be approved consistent with the public interest, since there is no scientific evidence that regasified LNG presents safety issues in a properly maintained gas distribution system and the compromised seals on WGL's system can be remedied before Cove Point's expansion project is placed in service."

The Cove Point expansion, which is scheduled for completion in the fall of 2008, would increase the sendout capacity to 1.8 Bcf/d from 1 Bcf/d, and would boost storage capacity to 14.6 Bcf from 7.8 Bcf. The project calls for the construction of two 160,000 cubic meter LNG storage tanks. Affiliate Dominion Transmission Inc. also plans to construct 161 miles of mostly 36-inch and 24-inch diameter pipeline in Maryland and Pennsylvania, and associated above ground facilities in Virginia, Pennsylvania, New York and West Virginia.

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