Dominion Resources Inc. won U.S. Energy Department approval to export liquefied natural gas from an existing import terminal in Maryland, the fourth such project authorized by the agency amid a natural-gas glut.
The project to modify the terminal, which may cost as much as $3.8 billion, was approved pending environmental reviews, according to a statement today. Richmond, Virginia-based Dominion closed at $58.62, up less than 1 percent in trading on the New York Stock Exchange.
Dominion still requires approval from the Federal Energy Regulatory Commission to start construction at the facility at Cove Point, on the shores of the Chesapeake Bay, Dan Donovan, a spokesman for the company, said today in an interview.
“We have financing and we’re fully subscribed by customers for capacity,” Donovan said. Final regulatory approval could come in the first quarter next year, he said.
Advances in natural-gas drilling techniques, including hydraulic fracturing, have led to increased U.S. production, prompting companies to seek export authority to markets including Japan and India. The Energy Department must approve before natural gas can be exported to nations that lack a free-trade agreement with the U.S.
“This demonstrates progress toward an enormous opportunity for the administration to bolster job creation and economic growth,” Erik Milito, director of the American Petroleum Institute’s upstream and industry operations, said in a statement. The Washington-based industry group for oil and gas companies said the agency’s approval may be a signal that it’s speeding applications to export natural gas.
Senator Ron Wyden, an Oregon Democrat and chairman of the Energy and Natural Resources Committee, said the agency may now need to justify further exports of natural gas.
“With today’s approval, the United States is now squarely in the range that experts are saying is the most likely level of U.S. natural gas exports,” Wyden said in a statement. If the agency approves additional overseas sales, it must “prove to American families and manufacturers that these exports will not have a significant impact on domestic prices, and in turn on energy security, growth and employment,” he said.
Shipments for Cove Point are under contract for 20 years with affiliates of Tokyo-based Sumitomo Corp. (8053) and GAIL India Ltd. (GAIL), based in New Delhi, Dominion announced April 1. It hired IHI E&C International Corp of Houston and Kiewit Corp. of Omaha, Nebraska, to build the complex.
Environmental groups including Earthjustice, the Chesapeake Climate Action Network and the Sierra Club criticized the Energy Department’s approval of Dominion’s facility.
The Cove Point terminal “would transform a sleepy natural gas import facility on the Chesapeake Bay into a massive export hub and hasten the already hectic pace of fracking for natural gas in the nearby Marcellus and Utica shale regions,” San Francisco-based Earthjustice said in a statement.
The Energy Department on Aug. 7 granted Lake Charles Exports LLC the authority to ship natural gas from its terminal in Louisiana. The company is a jointly owned subsidiary of BG Group Plc (BG/) based in London and Southern Union Co., which was acquired in 2012 by Dallas-based Energy Transfer Equity LP (ETE:US) for $5.4 billion.
The U.S. has previously approved liquefied natural gas exports from Cheniere Energy Inc. (LNG:US)’s Sabine Pass LNG terminal in Cameron Parish, Louisiana, and the Freeport LNG Terminal in Quintana Island, Texas. About 18 applications are pending at the department.
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