Both Shell NA LNG LLC and BP Energy Co. have protested Dominion Cove Point’s (DCP) request to build liquefied natural gas (LNG) export facilities at its import terminal in Lusby, MD, citing concerns that it could degrade services to DCP’s existing import customers and that the company was showing unduly preferential treatment to certain customers.
“Cove Point has not demonstrated in [its] application that the proposed export project will not degrade the [import] services that Shell LNG takes from Cove Point. Moreover, Cove Point has failed to show in the application that its existing customers will not subsidize the cost of the export project,” said Shell LNG, an affiliate of Shell Oil Co. and a major customer of Cove Point’s LNG import terminal in Maryland.
“Cove Point repeatedly states in the application that the export project will not degrade its existing services, that its existing customers will not subsidize this [export] project, and that it will honor all existing service agreements under the terms of its tariff.
“While Shell LNG appreciates Cove Point’s statements, they are couched in very general terms. Without more details and further explanation, it is difficult, if not impossible, for Shell LNG to determine the impact of the export project on Shell LNG,” the company said.
“Cove Point’s application fails to explain sufficiently the impact of the export project on Shell LNG’s existing services and costs…Nor has Cove Point explained whether LTD-1 [LNG tanker discharging] customers will be able to import LNG while export customers are in export mode. If there will be imports and exports in the same time frame, how does Cove Point plan to administer these services?” Chevron asked.
DCP has asked for early rulings on several issues to provide new export customers with comfort, while it has proposed to postpone (in some cases for many years) rulings on issues vital to Shell LNG’s interests.
Shell called on the Federal Energy Regulatory Commission to convene a technical conference to determine the impact of DCP’s export project on its existing import services.
DCP, a subsidiary of Richmond, VA-based Dominion, is seeking to build a $3.4-3.8 billion LNG export facility, to be sited along with its import facility in Lusby, and associated interstate natural gas pipeline facilities [CP13-113]. The export facility will have a marketed capacity of up to 5.75 million tonnes per annum (mtpa), of which only 4.6 mtpa is being marketed now, said Dominion spokesman Dan Donovan (see Daily GPI,April 2).
The company has called on the Commission to act on its application by February 2014 so that it can place the export facilities into service by mid-2017. Dominion has received permission from the Department of Energy 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.
In BP Energy’s protest, the company urged the Commission to “rectify consequences of unduly preferential conduct” by DCP when it allegedly provided Statoil, an existing import customer, a unique opportunity to “turn back” its import expansion storage and regasification capacity, while denying BP Energy, a similarly situated customer, the same opportunity.
“By offering Statoil an opportunity to simultaneously ‘turn back’ storage, regasification and Cove Point pipeline capacity, without also offering the same opportunity to BP Energy, DCP engaged in unduly preferential behavior in favor of Statoil.
“The Commission’s statutory responsibilities require an immediate cure for DCP’s discriminatory behavior and expeditious issuance of an interim order…which gives BP Energy the same ‘turn back’ opportunity offered to Statoil,” BP said.
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