Britain To Build A ‘National Flagship’ To Promote Maritime Trade
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By Jim Polson and Mark Chediak
Sept. 30 (Bloomberg) — Dominion Resources Inc. won final U.S. approval to export liquefied natural gas from an East Coast terminal it intends to place in a publicly traded partnership.
The U.S. Federal Energy Regulatory Commission issued the permit for the Cove Point terminal in Maryland, according to a statement yesterday. Dominion has proposed a tax-advantaged master limited partnership, or MLP, to own the terminal and use proceeds from a planned initial public offering to help fund construction estimated to cost as much as $3.8 billion.
“This is further confirmation of the viability of Dominion’s investment in exporting liquefied natural gas,” said Paul Patterson, a New York-based analyst with Glenrock Associates LLC.
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 is scheduled to begin shipments from the 5.25 million tons a year capacity plant in 2017. The U.S. Energy Department has approved Cove Point’s exports to both free-trade and non-free trade agreement countries, according to FERC’s statement.
Dominion expects to begin construction immediately upon FERC approval, Chief Financial Officer Mark McGettrick said at a Sept. 17 financial conference in New York. The partnership IPO also awaited FERC approval for the project, he said.
Cove Point would be the nearest export terminal to the Marcellus Shale, the most productive U.S. natural gas deposit. Cheniere Energy Inc.’s Sabine Pass and Sempra Energy’s Cameron terminal in Louisiana are the only U.S. export projects so far to win approval from the FERC and Energy Department.
Dominion’s waterfront site, about 60 miles (96 kilometers) southeast of Washington, D.C., has already imported liquefied natural gas and requires minimal construction that would damage the environment, Dominion said in a statement yesterday following the approval.
Opponents including the Chesapeake Climate Action Network, an environmental group, have vowed to contest FERC approval in the courts. FERC failed to consider total impacts from increased natural gas production, including greenhouse-gases associated with fracking, they said in filings.
FERC said the proposal, if mitigated with certain conditions, is “in the public interest.”
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.
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.
Copyright 2014 Bloomberg.
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