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Cove Point Gets DOE Export Go-Ahead; Environmentalists Keep Swinging

The U.S. Department of Energy (DOE) has granted Dominion Cove Point LNG LP final authorization to export liquefied domestic natural gas to non-free trade agreement (FTA) countries. The approval comes on the heels of a FERC denial of a request for rehearing of the Commission’s prior facility approval of the East Coast liquefied natural gas (LNG) project.

The terminal in Calvert County, MD, is authorized to export LNG up to the equivalent of 0.77 Bcf/d of natural gas for a period of 20 years. Cove Point received a conditional non-FTA approval from DOE in September 2013 (see Daily GPI, Sept. 12, 2013).

Cove Point was fifth in DOE’s non-FTA approval queue, according to data compiled by ClearView Energy Partners LLC. With the addition of the Cove Point volumes, the cumulative amount of LNG approved for export by DOE to non-FTA countries stands at 6.51 Bcf/d, according to ClearView. The previous non-FTA approval issued by DOE was to Freeport LNG Development LP’s project in Texas (see Daily GPI, Nov. 14, 2014).

"The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development and job creation around the country," DOE said in announcing the Cove Point final approval. "This increase in domestic natural gas production is expected to continue, with the Energy Information Administration forecasting a record average production rate of 72.4 Bcf/d in 2015.”

FERC, which gave its original approval to Cove Point last September (see Daily GPI, Sept. 30, 2014), recently denied a request for rehearing filed by opponents of the project (see Daily GPI, May 5; Dec. 30, 2014).

Several environmental groups on Thursday filed a lawsuit against FERC over its approval of the project. They claim the Commission failed to conduct a thorough review, asserting that an environmental impact statement was called for when the Commission performed a less-rigorous environmental assessment.

The lawsuit, filed in the federal appeals court for the DC Circuit, charges that FERC circumvented the law by failing to consider how Cove Point "would trigger expanded fracking for natural gas in the Marcellus Shale region, leading to significant new amounts of air, water and climate-disrupting pollution." The groups also contend that FERC failed to adequately consider the impact of foreign ships "dumping dirty wastewater" into the Chesapeake Bay. Earthjustice filed the lawsuit Thursday on behalf of the Chesapeake Climate Action Network, Patuxent Riverkeeper, and Sierra Club.

The charge that LNG exports would stimulate expanded use of hydraulic fracturing is not new. Environmental groups have been challenging FERC approvals on this basis for a while -- and they have yet to be successful.

In its Thursday order, DOE outlined the FERC objection to challenges against Cove Point previously brought by environmentalists.

“...FERC found that potential environmental effects associated with natural gas production in the Marcellus shale region are not sufficiently causally related to the liquefaction project to warrant detailed analysis as indirect impacts, and that Earthjustice failed to provide evidence to support such an analysis. FERC stated that such production is not ‘reasonably foreseeable’ within the meaning of NEPA [National Environmental Policy Act]. Second, FERC rejected the argument that it was required to analyze the cumulative impacts of projects related to upstream natural gas production and transportation in areas outside of the project area, where any such projects and impacts would be speculative.Third, FERC explained that the EA identified and quantified GHG emissions associated with the construction and operation of the liquefaction project.”

Also on Thursday, America's Natural Gas Alliance (ANGA) praised DOE's action. "From jobs and economic benefits, to increased energy security, exporting natural gas makes good sense for America and our allies," said ANGA CEO Marty Durbin. "It also allows a greater level of energy prosperity around the world and cleaner air. We look forward to the availability of more U.S. LNG export terminals and to sending some of our vast supplies of affordable natural gas to our friends overseas."

Federal law generally requires approval of natural gas exports to countries that have an FTA with the United States. For countries that do not have an FTA with the United States, the Natural Gas Act directs DOE to grant export authorizations unless the department finds that the proposed exports "will not be consistent with the public interest."

DOE said it conducted an extensive review of the Cove Point applications. Among other factors, DOE considered the economic, energy security, and environmental impacts and determined that exports at a rate of up to 0.77 Bcf/d for a period of 20 years was not inconsistent with the public interest.

The agency will continue to act on applications to export LNG from the Lower 48 states after completion of the review required by FERC under NEPA, and when DOE has sufficient information on which to base a public interest determination, it said. "During this time, the department will continue to monitor any market developments and assess their impact in subsequent public interest determinations as further information becomes available," the agency said.

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