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EPA Says FERC Should Weigh Gas Production Stimulus Effects of Cove Point

FERC should pay close attention to the potential impacts of increased natural gas production in its decision-making process for the Cove Point Liquefaction project, and it should also focus on potential environmental justice impacts from the Calvert County, MD, facility, according to the U.S. Environmental Agency (EPA).

"Both FERC [Federal Energy Regulatory Commission] and DOE [U.S. Department of Energy] have recognized that an increase in natural gas exports will result in increased production," EPA said in comments filed at FERC Monday. "However...FERC concludes that the nature of natural gas supply and pipeline system in the U.S. makes it difficult to predict accurately where the additional gas development activity will occur and thus concluded that it is not feasible to more specifically evaluate localized environmental impacts."

The agency recommended that FERC consider two recently released studies from the National Energy Technology Laboratory as it reviews Dominion Cove Point LNG LP's proposal to export 5.75 million metric tons per annum of LNG from a liquefaction facility on the Chesapeake Bay.

EPA also recommended that FERC attempt to determine if the project would have "direct, indirect and cumulative impacts" on low-income or minority communities, "including effects of construction, transportation of materials, fugitive dusts, economic effects, health and safety, and property value."

Finally, EPA said FERC should widen its look at the potential impacts of climate change on the region, consider potential impacts to Essential Fish Habitat and address the need for dredged materials handling management in the Chesapeake Bay.

In comments also filed Monday, the Chesapeake Bay Foundation said it finds the Environmental Assessment for the Cove Point project "deficient for failing to adequately address the potential cumulative impacts of the proposed project in light of the related present and foreseeable unconventional natural gas drilling activities." The environmental group has previously called for a programmatic environmental impact statement on all unconventional gas extraction in the Marcellus Shale and related activities throughout the entire Chesapeake Bay watershed (see Shale Daily, April 5, 2011).

Monday marked the end of a 30-day public comment period on the plan (see Daily GPI, May 15; March 3). EPA had asked FERC to further extend the comment period to complete its review of the project (see Daily GPI, June 9). FERC issued an environmental assessment for the project last month.

DOE issued Dominion a conditional license for LNG exports, to countries without a free trade agreement with the United States, in September 2013 (see Daily GPI, Sept. 12, 2013). The license gave Dominion Cove Point permission to export up to 0.77 Bcf/d for 20 years. Dominion recently received regulatory approval from the Maryland Public Service Commission for its proposal to export LNG from its facilities on Chesapeake Bay, in Calvert County, MD.

Dominion estimates construction of the export project will cost between $3.4 billion and $3.8 billion, and will generate an additional $40 million in annual tax revenue to Calvert County.

Companies with import capacity at Cove Point include Atlanta Gas Light, BP, Public Service Co. of North Carolina, Sempra Energy Trading, Shell, Statoil, Virginia Natural Gas, Virginia Power Services and Washington Gas Light.

Analysts at ClearView Energy Partners believe that FERC will decide on Dominion's Cove Point LNG application by the end of August (see Daily GPI, June 13).

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