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FERC Refuses to Stay Order on Cove Point Deliveries

March 23, 2009
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FERC last Thursday rejected a request by Washington Gas Light Co. (WGL) to stay an October 2008 order that restricted liquefied natural gas (LNG) deliveries from the expanded Dominion Cove Point LP terminal in Maryland to 530,000 Dth/d in an effort to avoid additional leaks on the distribution system of the Washington, DC-based utility.

The Federal Energy Regulatory Commission (FERC) also denied WGL's alternative request to cap physical deliveries of LNG at 30,000 Dth/d at the interconnect between the Cove Point Pipeline and Columbia Gas Transmission system at Loudoun, VA, instead of the 530,000 Dth/d cap that was imposed in the remand order.

In the October order on remand, FERC ruled that Dominion Cove Point LP and Dominion Transmission Inc. could complete their expansion of the LNG terminal on Maryland's eastern shore and associated pipeline facilities, while at the same time it barred the delivery of additional regasified LNG volumes from Cove Point to WGL's distribution system to shield it from further leaks (see NGI, Oct. 13, 2008).

The remand order was in response to the U.S. Court of Appeals for the District of Columbia Circuit's decision last July vacating a Commission order approving the expansion of the LNG terminal and associated pipeline facilities in Pennsylvania and Maryland. The court ruled that the evidence did not support the agency's conclusion that WGL could fix widespread leaks on its distribution system before the terminal expansion went into operation (see NGI, July 21, 2008). WGL claimed that the leaks on its system were caused by regasified LNG from the Cove Point facility.

Responding to requests to rehear the remand order, FERC in January ruled that the October order had appropriately addressed the court's concern by conditioning operation of the terminal project to prevent additional volumes of regasified LNG associated with the expansion from reaching certain portions of WGL's system (see NGI, Jan. 19).

In seeking the stay, WGL claimed that as a result of several changes soon to occur, increased amounts of low C5+ levels of hydrocarbons in vaporized LNG would create more gas leakage and potentially unsafe conditions to densely populated portions of WGL's service area, which covers parts of Virginia, Maryland and Washington, DC.

"We are not persuaded that WGL has established with sufficient certainty that there will be any increase in deliveries of low C5+ regasified LNG at Columbia-Loudoun, much less how significant any increase might be. Thus WGL's request fails to demonstrate irreparable injury absent stay," the FERC order said [CP05-130].

"WGL's...assertion, that there may be increased deliveries of LNG to Cove Point within the next few months due to expected changes in the world LNG market, is by its own terms speculative. WGL's [other] claim, that lower domestic gas flows during the spring shoulder season will result in more unblended LNG being delivered to Columbia-Loudoun, is no more certain or quantified," the order said.

"Even if these two events were to occur, a stay of the remand and rehearing order would do nothing to impact the likelihood that WGL's at-risk system may be exposed to volumes of regasified LNG above historical levels."

In rejecting WGL's alternative request to lower the cap on physical deliveries at Columbia-Loudoun, FERC said such action would "harm Columbia Gas and its customers and the existing Cove Point LNG shippers, as well as the public interest considerations upon which those authorizations were based."

In 2006 WGL petitioned the court for review of the FERC order approving the construction of the Cove Point LNG project, which increased the sendout capacity of the terminal to 1.8 Bcf/d from 1 Bcf/d, and raised storage capacity to 14.6 Bcf from 7.8 Bcf. The expansion of the terminal went into service earlier this year (see NGI, Jan. 12).

WGL reported more than 1,600 coupling leaks in 2004 when unblended regasified LNG was introduced into its system in Prince George's County in Maryland, an area primarily supplied with regasified LNG from Dominion Cove Point. The utility blamed the leaks on the chemical composition of the regasified LNG from Cove Point and sought to block the terminal expansion (see NGI, July 11, 2005).

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