With Marcellus Shale natural gas as its supply backbone, Dominion Cove Point LNG could be reconfigured to export liquefied natural gas (LNG) to overseas markets, Dominion CEO Thomas Farrell said Wednesday.
Farrell, who spoke at CERAWeek 2011 in Houston, said the Lusby, MD, terminal is geographically suited to transport growing gas supplies from the Appalachian Basin to wherever customers want.
Dominion Cove Point has a storage capacity of 14.6 Bcf and a daily sendout capacity of 1.8 Bcf. The terminal connects via its pipeline, to Transcontinental Gas Pipeline, Columbia Gas Transmission and Dominion Transmission.
What the LNG facility offers is every real estate agent's dream: location, location, location. Dominion's pipe system runs through the Marcellus Shale, and new infrastructure allows the pipe to transport gas to downstream Northeast markets.
"We can give producers flexibility to get the gas to Europe or Asia, or to keep it domestically," Farrell told the audience.
Dominion has yet to apply for the required Federal Energy Regulatory Commission permits, and there's no timeline to do so, said the CEO. However, if producers and shippers want LNG export capacity and Dominion can secure the permits, the liquefaction facility would be a go, Farrell said.
In the works already are a number of plans to export LNG along the U.S. Gulf Coast and in Canada. New LNG terminal proposals also are on the table in Oregon.
Recently analysts at at PIRA Energy Group said they had factored "modest" LNG exports into their long-term outlook (see Daily GPI, Dec. 16, 2010). They said they expect the Kitimat LNG project to go forward on Canada's western coast, as well as at least one project in the Gulf Coast.
Farrell acknowledged that Dominion Cove Point would face some solid competitors in the search for customers. However, none of the export proposals have Cove Point's East Coast location, nor do they already partner with the likes of BP plc, Royal Dutch Shell plc and Statoil ASA, he said.
BP is the largest North American gas marketer. Shell became one of the biggest gas producers in the Marcellus Shale after it bought East Resources Inc. last year (see Daily GPI, June 1, 2010). Norwegian energy giant Statoil began a Marcellus partnership in 2008 with Chesapeake Energy Corp. and it has since upped its leasehold (see Daily GPI, March 29, 2010; Nov. 12, 2008).
The integrated producers could be interested in Atlantic Basin arbitrage opportunities, said the CEO. Chesapeake CEO Aubrey McClendon, who helms one of the largest gas producers in the country, also has off and on expressed an interest in exporting LNG (see Daily GPI, Sept. 8, 2009; Aug. 4, 2008).
According to Calvert County, MD, officials, Dominion has indicated that it may apply to build additional facilities at the Cove Point site. However, proposed plans were not expected to involve "major" construction, a spokeswoman said.
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