NGI The Weekly Gas Market Report / NGI All News Access

Dominion Asks FERC to Renew Authorizations for Cove Point LNG

August 4, 2008
/ Print
| Share More
/ Text Size+

Responding to a recent court ruling overturning an order approving their nearly completed expansion project, Dominion Cove Point LNG LP and Dominion Transmission Inc. have called on FERC to urgently affirm and reissue all of the agency's authorizations for the $700 million expansion of their liquefied natural gas (LNG) import terminal in Lusby, MD, and associated pipeline facilities.

Dominion asked the Federal Energy Regulatory Commission (FERC) to issue a decision by Aug. 29 because petitions to appeal athe court ruling overturning FERC's authorizations for the expansion are due on Sept. 2, and the court's mandate in the case is expected to be issued on Sept. 9.

The request comes two weeks after the U.S. Court of Appeals for the District of Columbia Circuit vacated a FERC order approving the expansion of Dominion Cove Point's LNG terminal, ruling that the evidence did not support the agency's conclusion that Washington, DC-based Washington Gas Light (WGL) can fix widespread leaks on its distribution system before the terminal expansion goes into operation (see NGI, July 21). WGL contends that the leaks on its system were caused by LNG from the Cove Point facility.

Specifically the two companies, which are subsidiaries of Richmond, VA-based Dominion Resources, asked FERC to: 1) affirm and reissue Natural Gas Act (NGA) Section 7 certificates for the construction by Dominion Transmission of new pipeline and storage facilities; 2) affirm and reissue NGA Section 3 authorization for the continued construction of the Cove Point terminal expansion; and 3) authorize the terminal expansion to be placed in service when completed "because it is in the public interest despite the deficiencies of the Washington Gas Light system."

In related action, the Commission last Monday said it will convene a technical conference on Aug. 14 to "more fully address whether, consistent with the public interest, the Cove Point expansion project can go forward without causing unsafe leakage" on WGL's distribution system.

"Any work stoppage during the remaining, final phase of the expansion construction would inflict significant damage on Dominion, its customers and the public. Suspension of construction, even for a period of days, has the potential to delay completion of the project in-service for a year or more," the Dominion affiliates told FERC.

"If Dominion were required to suspend construction -- were the court's mandate to issue before the Commission reissues construction authorization -- Dominion's contractors would become idle and have the incentive to pursue other opportunities in a market that demands and highly values their services," they said.

The Cove Point terminal expansion is scheduled to be completed in October, while 162 miles of pipeline in Maryland, Pennsylvania and West Virginia and eight compressor station projects are due to be completed in the fourth quarter.

WGL petitioned the DC appellate court to review FERC's 2006 order approving the construction of the Dominion Cove Point project, which would increase the sendout capacity of the terminal on the eastern shore of Maryland to 1.8 Bcf/d from 1 Bcf/d, and would boost storage capacity to 14.6 Bcf from 7.8 Bcf. The utility challenged the order on the grounds that an influx of LNG from the Cove Point expansion would aggravate leaks on its distribution system.

In 2005 WGL said it discovered more than 1,000 leaks concentrated in Prince George's County, MD, an area primarily supplied by vaporized LNG from Cove Point. The utility blamed the leaks on the chemical composition of the LNG from Cove Point (see NGI, July 11, 2005).

FERC, however, had found that the influx of blended LNG "would not have adversely affected WGL's system [in Prince George's County] if a subset of the compression couplings had not been compromised during the installation process" decades ago.The agency concluded that the leaks occurred because WGL applied hot tar to system couplings when they were installed.

The court concurred with the Commission on the cause of the leaks, but it said the agency failed to support its conclusion that the leaks on the WGL system could be fixed prior to the expansion going into operation. Because of this, the court vacated the authorizations approving the terminal expansion and pipeline facilities, and remanded the case "so FERC [could] more fully address whether the expansion can go forward without causing unsafe leakage."

©Copyright 2008 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus