Dominion cleared to export

NATRIUM – A Wednesday ruling should allow natural gas drawn from the Upper Ohio Valley to be burned in Tokyo and New Delhi, but not everyone is excited about the $3.8 billion Dominion Resources Cove Point project.

Following months of review and consideration, the U.S. Department of Energy decided to allow Dominion to export liquefied natural gas from the Maryland facility at a rate of up to 0.77 billion cubic feet per day for 20 years. Thomas F. Farrell II, Dominion chairman, president and chief executive officer, has said much of this gas will be drawn from Marcellus and Utica shale drilling operations in Ohio and West Virginia.

“We agree with the DOE’s decision that exports are expected to bring economic benefits to the country,” Farrell said Wednesday. “It is good news on many fronts, including the thousands of jobs that will be created, the boost in government revenues that will result and the support it provides to allied nations.

“Dominion is dedicated to constructing a safe and reliable facility that is an asset to the community, state and country,” he added, noting the company hopes to have Cove Point up and running by 2017.

In the Upper Ohio Valley, Dominion entered a $1.5 billion partnership with Caiman Energy to operate Marshall County’s Natrium natural gas processing plant under the Blue Racer Midstream banner. This center is one of several along the line that would send Utica and Marcellus gas to Cove Point for export.

Energy Department officials said they reviewed nearly 200,000 public comments related to the Cove Point project, many of which favored the venture and many that opposed it. The department determined exporting the natural gas was “not inconsistent with the public interest.”

The department also states that natural gas development is having a “transformative impact on the U.S. energy landscape, helping to improve our energy security while spurring economic development.” The Energy Information Administration forecasts a record production rate of 69.96 billion cubic feet of natural gas per day for this year in 2013.

Erik Milito, director of Upstream and Industry Operations for the Washington, D.C.-based American Petroleum Institute, sees the decision in a positive light.

“The shale gas revolution has fundamentally changed the energy equation, positioning the United States as an energy superpower that can provide ample, affordable supplies to the domestic and international markets,” he said.

Dominion officials said the project will create as many as 4,000 jobs for the state of Maryland, with another 14,600 jobs created once the Cove Point facility opens. The project would produce an estimated $9.8 billion in royalty payments to mineral owners over 25 years, while generating about $1 billion annually for federal, state and local governments.

But environmental groups are crying foul, as they express hope that the Federal Energy Regulatory Commission will use its power to stop the Cove Point project.

“Dominion managed to convince the Department of Energy that exploiting the people of the Marcellus and Utica shale regions for the sake of the oil and gas industry was a good idea,” said Jocelyn D’Ambrosio, a lawyer for the environmental law group Earthjustice. “Dominion should be prepared to face stiff resistance at each remaining step in their ongoing approval process.”

“It’s a bad deal all around: for public health, the environment and America’s working people,” said Deb Nardone, director of the Sierra Club’s Beyond Natural Gas Campaign. “The Sierra Club intends to hold Dominion accountable for complying with the commitments it made to protect the Cove Point environment.”