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Columbia Buys Pepco's Share of Cove Point, Plans Imports

Columbia Buys Pepco's Share of Cove Point, Plans Imports

Ending a partnership in existence since 1994, Columbia's liquefied natural gas (LNG) subsidiary, Columbia LNG, bought Pepco Energy Co.'s 50% interest of the Cove Point LNG facility in Maryland for an undisclosed sum, the companies said last week. Columbia also announced plans to recommission Cove Point's mothballed marine terminal to handle imports for the first time in 20 years. The purchase needs Federal Trade Commission approval under the Hart-Scott-Rodino Act, and Columbia said it hopes to close the deal by the end of next month and file for recommissioning the terminal later next year.

Located in Lusby, MD, the Cove Point LNG terminal includes LNG storage and terminal operations and an 87-mile natural gas pipeline. The pipeline extends from the Cove Point terminal to interconnections with gas pipelines in Northern Virginia. It is able to send out up to 1 Bcf/d. It currently provides peak shaving services to customers in the Mid-Atlantic and Southeastern regions.

"This is another example of Columbia's strategic focus on providing flexible and valuable transport options to the rapidly growing Northeast and Mid-Atlantic natural gas markets," said Oliver G. Richard III, CEO of Columbia Energy Group. "The plan that Columbia LNG has developed for the Cove Point terminal is in line with Columbia's overall vision for increasing our growth."

An open season will be held after the acquisition is completed. Based on the results of the open season, Cove Point is expected to file an application with FERC to reactivate the terminal's marine facilities, Columbia said. The terminal has been without marine facilities for the last 20 years, Mike McGarry, a Columbia spokesman, said.

Columbia LNG's sole asset is the Cove Point terminal. Columbia and Pepco have jointly operated it since the partnership bought the facility in 1994. Currently, there are 32 employees at the plant, but McGarry said if the marine terminal is approved, that number is expected to double.

If reactivated, Cove Point would represent the fourth LNG marine terminal in the Atlantic and Gulf of Mexico. Cabot LNG's Distrigas facility and CMS' lake Charles facility already import LNG from overseas, and earlier this year, Sonat filed to reactivate the Elba Island terminal.

John Norris

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