Dominion begins construction for Cove Point LNG export project

Dominion (NYSE: D) has begun construction-related activities for the Cove Point Liquefied Natural Gas Export project, one of the largest private investments ever in Maryland and one designed to deliver significant economic and environmental benefits.

“This is a historic event for Dominion, Maryland and the nation,” said Diane Leopold, president of the company’s Dominion Energy business unit. “The Cove Point LNG export project will help meet the world’s need to move toward cleaner fuels. At the same time, it will provide significant economic benefits in terms of thousands of construction jobs, hundreds of millions of dollars in new tax revenues over the life of the facility, and an outlet for some of the nation’s surplus natural gas supplies.”

Leopold noted that the project underwent a comprehensive three-year regulatory review and approval process designed to ensure the project meets all safety, environmental and other requirements. Numerous federal, state and local agencies as well as thousands of private citizens participated in the process. More than 60 approvals and permits were required before construction could begin.

Construction activities have begun at the LNG terminal with initial preparations for worksite clearing and grading. Activities were initiated earlier this month at two off-site locations, a temporary pier being built on the Pautuxent River to receive barge shipments of large equipment and a temporary location for offices, material staging and parking for project construction workers. 

The Cove Point LNG Export project is estimated to cost between $3.4 billion and $3.8 billion and will create thousands of skilled construction jobs, 75 permanent jobs and an additional $40 million in annual tax revenue to Calvert County. The county today receives $15.7 million a year from the LNG import facility.

The proposed export facility will be within the 131-acre footprint of the existing LNG terminal site. No new pipelines or storage tanks are needed at the facility. It is targeted to begin operations in late 2017.

Dominion has fully subscribed the marketed capacity of the project with 20-year service agreements with ST Cove Point, LLC, a joint venture of Sumitomo Corporation, a Japanese corporation that is one of the world’s leading trading companies, and Tokyo Gas Co., Ltd., a Japanese corporation that is the largest natural gas utility in Japan; and GAIL Global (USA) LNG LLC, a wholly owned indirect U.S. subsidiary of GAIL (India) Limited, one of the largest natural gas processing and distributing companies in India.

IHI/Kiewit Cove Point, a joint venture between IHI E&C International Corporation of Houston and Kiewit Corporation of Omaha, Neb., is the engineering, procurement and construction contractor for the new liquefaction facilities.

The company began the regulatory approval process in September 2011 with an application to U.S. Department of Energy for permission to export LNG from Cove Point. It initiated proceedings with the Federal Energy Regulatory Commission with a pre-filing in June 2012. The application for approval was submitted in April 2013. The environmental assessment was issued in May 2014, and approval to site, construct and operate the LNG liquefaction and export project came late last month.