Dominion said Friday it will proceed with engineering, marketing and regulatory review processes for proposed natural gas liquefaction and export facilities at its Dominion Cove Point liquefied natural gas (LNG) import terminal on the Chesapeake Bay in Lusby, MD, following a favorable court ruling on the project.

Circuit Court Judge James P. Salmon of Maryland ruled Friday that Dominion Cove Point’s agreement with environmental agencies allows it to build liquefaction facilities inside the plant’s fenced area and export LNG. The Sierra Club had maintained Dominion needed its permission to build the facilities.

“Dominion has made considerable progress toward a project that will bring jobs and revenues to the national and local economies,” said Dominion CEO Thomas F. Farrell. “We have received support from business, labor, government, community and environmental groups for a major construction project that would bring great benefits to many people.”

The Sierra Club had maintained that a legacy agreement between it and a previous owner of the Cove Point LNG terminal site prevented current owner Dominion from adding liquefaction and export facilities (see Daily GPI, May 21, 2012; April 27, 2012).

The liquefaction project is expected to cost between $2.5 billion and $3.5 billion. Dominion has received permission from the U.S. Department of Energy (DOE) to act as an agent for LNG exports to countries that have free trade agreements (FTA) with the United States. It is awaiting action on its application to export to non-FTA countries.

Dominion has also entered the Federal Energy Regulatory Commission’s (FERC) prefiling process in anticipation of filing an application for the project this year. Engineering studies are continuing and are expected to be completed soon, Dominion said. Terminal services agreements are under negotiation with potential customers, including trading company Sumitomo Corp. of Japan.

In November the Environmental Protection Agency (EPA) called on FERC to expand the scope of its environmental analysis of Dominion Cove Point’s proposed liquefaction facilities to include the “indirect effects” related to natural gas drilling and combustion (see Daily GPI, Nov. 26, 2012). EPA’s request is not a new one. The Commission already has rejected a similar request to consider the “indirect effects” related to a liquefaction facility.

In a separate case involving Sabine Pass Liquefaction LLC and Sabine Pass LNG in 2012, the Commission shot down the Sierra Club’s arguments that FERC’s approval of the project was “arbitrary and capricious” because it failed to consider the project’s “reasonable foreseeable” indirect effects of increasing the development of shale gas and its associated environmental impacts (see Daily GPI, July 30, 2012).

Last fall, Maryland Congressman Andy Harris, a Republican, called on FERC to approve the project (see Daily GPI, Oct. 23, 2012). The Cove Point export project “will provide very significant benefits for the entire mid-Atlantic region, the state of Maryland, the first congressional district of Maryland which I…represent, and the nation as a whole,” Harris said.

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