Dominion LNG Export Project Clears U.S. Environmental Review

May 15, 2014 3:02 pm ET

(Updates with Dominion comment in fifth paragraph, environmental groups’ in seventh paragraph.)

May 15 (Bloomberg) -- Dominion Resources Inc.’s plan to export liquefied natural gas cleared a U.S. environmental review, a key step toward final approval as supporters in Congress seek to expedite overseas shipments of the fuel.

U.S. Federal Energy Regulatory Commission approval of Dominion’s proposed Cove Point project on Maryland’s Chesapeake Bay would have “no significant impact” on the environment, as long as proper measures are taken, the staff said today in an environmental assessment.

The full commission is scheduled to issue a final decision on Cove Point by Aug. 13. Cheniere Energy Inc.’s Sabine Pass is the only U.S. project so far to win approval from the FERC and Energy Department.

Dominion, of Richmond, Virginia, is seeking to take advantage of a boom in U.S. natural gas production, driven by advances in drilling techniques including hydraulic fracturing, or fracking. Cove Point, which may cost as much as $3.8 billion to build, is scheduled to begin shipments in late 2017.

The export terminal will be built on a waterfront site that is already prepared to receive imports of liquefied natural gas and requires minimal construction that would damage the environment, according to Dominion.

Limited Impact

“There is no need for additional pipelines, storage tanks or permanent piers, thus limiting its impact,” Diane Leopold, president of Dominion Energy Inc., said today in a statement.

Environmental groups including San Francisco-based Earthjustice and the Chesapeake Climate Action Network criticized the review as insufficient. The FERC staff didn’t consider total impacts from increased natural gas production, including greenhouse-gases associated with fracking, they said in a e-mailed statement.

The climate network plans to challenge the report during the public-comment period that continues until June 16, Kelly Trout, a spokeswoman for the Takoma Park, Maryland-based organization, said by phone.

Advocates of natural-gas exports in Congress and the industry in recent months have seized on the potential for U.S. supplies of the fuel to cut Europe’s reliance on Russia. Europe gets about 30 percent of its natural gas from Russia, which annexed Ukraine’s Crimea region in March.

FERC, Energy

U.S. facilities that plan to ship gas to nations without a free-trade agreement with the U.S. need Energy Department approval in addition to passing the FERC-led environmental review. Cove Point has already won Energy Department approval. Most of the proposed projects won’t start exporting until 2017 or 2018, as the facilities take time to build.

Sempra Energy’s proposed Cameron LNG terminal cleared the FERC staff environmental review on April 30. Cameron and Sabine Pass are in Louisiana.

House Speaker John Boehner, an Ohio Republican, and Senate Energy and Natural Resources Committee Chairman Mary Landrieu, a Louisiana Democrat, are among lawmakers who have called for expedited approvals.

Dominion, which is modifying an existing import terminal about 62 miles (100 kilometers) southeast of Washington, D.C., will liquefy the gas and provide export services from Cove Point. It won’t own the fuel.

The company has in place 20-year contracts with affiliates of Japan’s Sumitomo Corp. and Gail India Ltd. of New Delhi. Neither Japan nor India have free-trade deals with the U.S.