Dominion Transmission is expecting Statoil to sign agreements that will cover all of the capacity in two proposed pipeline projects designed to provide a summer storage alternative for Cove Point liquefied natural gas (LNG). Dominion is planning to add about 800 MMcf/d of new sendout capacity and another 6.8 Bcf of onsite LNG storage space to the Cove Point terminal on the Chesapeake Bay in Maryland.

The related pipeline projects, which were first announced last month, include a greenfield pipeline to be located in existing right-of-way in Pennsylvania and a looping of the existing Dominion Cove Point pipeline in Maryland to expand takeaway transportation from the LNG terminal.

Dominion expects the Central Pennsylvania line to include two compressor stations to move gas from its Perulack station in Juniata County to the Dominion South Point market hub, other interstate pipelines and the major natural gas storage fields at Leidy in Clinton County, PA. Leidy is a major storage center for gas used by markets throughout the Northeast. Both pipeline expansions will follow the FERC-approved open seasons where other shipper interests can be evaluated.

“Statoil is looking to buy all of this capacity,” said Dominion spokesman Dan Donovan. “They have signed a letter of intent, but we have to have two different open seasons because Dominion Transmission owns the pipeline in Pennsylvania and Dominion Cove Point owns the one in Maryland.”

Construction of liquefaction and import facilities takes years, and as a result, the timing of Dominion’s proposed pipelines is “pretty far off into the future,” Donovan added. “We still have to build the [LNG] tanks at the plant, and it takes three years to do that. We don’t think we’ll get the tanks done until about 2008.”

Dominion currently is adding a fifth 2.8 Bcf LNG storage tank at Cove Point that will be in service in January 2005, bringing LNG storage capacity to 7.8 Bcf. When it purchased all the rights to the plant, Dominion also expanded vaporization to 1 Bcf/d. With the additional expansion planned to accommodate volumes for Statoil, Dominion expects to add two or three more tanks, bringing total storage space to 14.6 Bcf. It also will expand vaporization to 1.8 Bcf/d.

“When the LNG plant was first built in the ’70s CNG had the same plan to put a line basically to Leidy so that all this gas coming into Maryland could be stored some place in the summertime,” said Donovan. “In the wintertime, of course, there is no problem getting rid of it.”

The Pennsylvania pipeline will parallel mainly Dominion’s or Texas Eastern’s existing pipeline systems. “We’re talking about 24-inch in Pennsylvania and 36-inch [looping] in Maryland” along a portion of the 87-mile Dominion Cove Point system, he said. The company is planning to hold open houses on the pipeline projects in Maryland and Pennsylvania over the next two weeks.

“We think we should go to the top of the [FERC] list of anybody that is talking about an expansion or a new plant because of all the advantages we have: it’s all on existing sites and right-of-way and our LNG dock is a mile offshore with more than 1,100 acres of surrounding property as a buffer zone,” said Donovan. “We think this is a good plan with minimal disruption to the environment.”

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