A Maryland congressman has called on FERC to approve Dominion Cove Point’s proposed liquefied natural gas (LNG) liquefaction facility in Lusby, MD, “without delay,” noting that it has “significant merits and warrants swift approval.” At the same time, a group of analysts tried to quell concerns that the Department of Energy (DOE) might reverse its order approving Sabine Pass Liquefaction LLC’s license to export LNG to nations with which the U.S. does not have free trade agreements (non-FTA).

“Limited export of our abundant domestic supplies of natural gas makes energy policy sense, it makes economic development sense, and it makes national security sense,” wrote Republican Rep. Andy Harris in a letter Friday to the Federal Energy Regulatory Commission (FERC).

“Selling a limited amount of natural gas overseas will help provide new markets for our domestic natural gas, thereby avoiding the boom or bust cycles that the industry has experienced in the past.”

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 noted. “That said, this is a very important project with clear benefits. I urge you to approve the application without delay.”

That may not be possible, given that the project is at the center of a legal dispute. The Sierra Club contends that a legacy agreement between it and a previous owner of the Cove Point LNG terminal site in Maryland stops Dominion from adding liquefaction and export facilities (see Daily GPI, April 27).

The Sierra Club said its 2005 agreement with Dominion precludes an expansion of the facility that would be required to create liquefaction and export capability. The original Sierra Club agreement on the Cove Point site was with Columbia LNG Corp. and dates back to the 1970s. It has been modified more than once over the years, according to the Sierra Club.

Dominion countered last May by filing a lawsuit in the Circuit Court of Calvert County, MD, for declaratory judgment to confirm its right to build the project (see Daily GPI, May 21). Dominion contends that the plain language of the 2005 agreement specifically permits all activities related to the planned liquefaction project, which would take advantage of the boom in natural gas production from the Marcellus and Utica shales.

Earlier this month a Maryland circuit court judge heard arguments from lawyers for Dominion and two environmental groups, the opening salvo in the lawsuit over the proposed natural gas liquefaction facility (see Daily GPI, Oct. 2). The judge ultimately decided to take the case under advisement.

Calvert County Circuit Court Judge James Salmon heard cross motions for summary judgment from attorneys representing Dominion, the Maryland chapter of the Sierra Club and the Maryland Conservation Council (MCC) in Dominion Cove Point LNG LP v. The Sierra Club et al., (No. 04-C-12-000598). The MCC sided with Dominion.

Dominion Cove Point LNG has received approval from DOE to export LNG to FTA countries, but it is awaiting action on its request to export to non-FTA country markets.

The only project to receive DOE approval to export to non-FTA nations is Cheniere Energy’s Sabine Pass liquefaction project. The Sierra Club asked the DOE to issue a stay of the Sabine Pass export project, but the department last week put the request on hold (see Daily GPI, Oct. 17). “The DOE’s decision to ‘toll’ the Sierra Club’s rehearing request is procedural not substantive. If the DOE does not act upon a rehearing request within 30 days, it is deemed denied by operation of law,” which would allow the Sierra Club to take the case to court, said the energy analyst with Clear View Energy Partners LLC in Washington, DC.

“We do not expect the DOE to reconsider its approval for Sabine Pass. We see nothing in Sierra Club’s rehearing request that we believe will compel the DOE to reverse its August” order granting long-term authorization to export LNG from the Sabine Pass terminal to non-FTA nations, they said. “The DOE relied heavily on the FERC’s approach under the National Environmental Policy Act as the appropriate course of action, underscored by the Second Circuit Court’s June validation of the FERC’s approach. The Second Circuit dismissed a case brought by the Sierra Club and others against the FERC’s approval of Inergy’s MARC I pipeline that had a very similar line of argument.”

The Sierra Club and other groups challenged FERC’s environmental review of Inergy subsidiary Central New York Oil & Gas Co. LLC’s MARC I Hub Line project, which would give northern markets greater access to Marcellus Shale gas, calling it inadequate and deficient. The MARC I pipeline is expected to go into service before the end of the year, the company said.

In April FERC approved the Sabine Pass liquefaction facility (see Daily GPI, April 17). It was the Commission’s first authorization of a project that would export LNG from production resources within the United States.

“Although it had standing in the FERC proceeding [involving the Sabine Pass liquefaction facility], Sierra Club chose not to take the matter to court. [It] had 60 days from FERC’s denial of its rehearing request on the Sabine Pass certificate to file an appeal in court. Our scouring of the court filing system indicates that the Sierra Club elected not to pursue court review.

“Either the Sierra Club has elected to direct its resources elsewhere, or the organization may believe it will have better success appealing the DOE’s non-FTA decision. We are not convinced that would be a stronger legal strategy,” the energy analysts said.

Responding to questions about potential caps on exports, the analysts said that the “DOE’s effort to ascertain the impact on the public interests and the concerns raised by U.S. manufacturers regarding potential adverse price impacts leads us to believe that even FTA [export] volumes could be restricted.”

Moreover, “We believe the DOE retains the ability to modify granted authorizations for good cause (including protecting the public interest). [And] we do not expect the U.S. government to act in a manner that would amount to turning a blind eye to the re-export of FTA shipments to non-FTA countries in order to circumvent a volume cap that the DOE would have gone to great lengths to set in the name of protecting the public interest,” the Clear View analysts said.

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