Gassing Up the World
Turning Cove Point into an energy exporter is a big deal for Calvert County, and for America
Dominion Cove Point LNG moved a big step closer to an historic transformation last week. The big energy mover on little Calvert County’s southern Bay shore won the U.S. Department of Energy’s approval to export American natural gas, in liquefied form, to any nation that wants to buy.
The date was September 11, a portentous anniversary both for the nation and for the LNG terminal’s history.
In the wake of September 11, 2001, fears of terrorist attack dominated years of debate on whether the moribund terminal would reopen to import liquefied natural gas.
The prospect of increasing the nation’s energy supply tipped that balance.
Cove Point got the go ahead and has since won every new campaign in its unremitting drive for expansion — despite opposition at every step.
But energy is risky business. When Dominion got its ducks in a row for a full-bore schedule of imports, the game changed. Because of fracking and the economies of natural gas, imports ceased.
“Dominion is lucky in many ways,” spokesman Dan Donovan told Bay Weekly from Pittsburgh. “Cove Point was designed to give access to the biggest market in world, the Northeast and Mid-Atlantic. Now the region turns out to be home to the second largest gas field in the world.”
The new drive to export LNG has enormous consequences for Calvert County and for Maryland.
For Calvert, Dominion’s expansion promises more than 4,000 construction jobs, 180 permanent jobs plus $1 billion in annual county, state and federal revenues. Calvert’s share will be about $40 million a year.
At the same time, expansion means tons more air pollution discharged into Calvert County as the gas is liquefied.
For America’s future, the natural gas boom and exporting energy rather than importing it mark a game-changing dynamic unimaginable just a few years ago.
Bay Weekly has followed the saga of the Cove Point terminal for years. To put the new era in perspective, this week we’ve assembled an interpreted timeline from our files and stories.
1970 — In the Beginning
Columbia Gas Systems seeks to build a port of entry for imported liquefied natural gas on 800 acres of prime natural area designated by the state to be part of Calvert Cliffs State Park.
During the energy crisis of the 1970s, LNG gains favor as an alternative to oil. But it’s still imported from South America, the Middle East and the North Sea.
1972 — The Treaty
The Sierra Club, allied with the Maryland Conservation Council, uses the newly enacted National Environmental Policy Act to block construction.
In an out-of-court settlement, Columbia agrees to protect the beaches, freshwater marsh and the appearance of the shoreline.
The agreement also binds Columbia — and any future owners of the terminal — to conditional land use and requires the approval of the environmental groups for expansions.
1973 — Getting Ready
About 100 acres are prepared as a high-tech receiving port for liquefied natural gas. Per treaty, design is modified to include a mile-long tunnel under the Bay to offshore gas docks. At the gas dock, tankers from Algeria unload their valuable cargo to four storage tanks that become landmarks on Calvert’s shore.
The liquid is warmed back to gas to travel to wherever customers are waiting along an interstate pipeline that stretches from New England to Texas.
1978 — Tankers Arrive
Tankers from Algeria begin delivering LNG and continue arriving in Chesapeake Bay for two years. But the price starts going up at roughly the same time that gas production
increases in the United States with wellhead price deregulation.
1980s — Fancy Fishing Hole
The economics of importing LNG no longer make sense and imports stop. Seemingly abandoned, the gas docks become a popular destination for Bay fishermen who follow the fish to the structure, as complex below water as above.
1994 — New Enterprise
With imports still not arriving, the facility is transformed to store domestic natural gas. A liquefaction unit is installed to transform the gas into a liquid, which occurs at around –260 degrees Fahrenheit. Liquefaction also reduces volume massively: by 600 times.
2000 — New Owners
Williams Companies, of Tulsa, Oklahoma, buys the mothballed Cove Point terminal.
The company is obligated to work with The Sierra Club and Maryland Conservation Council as the Cove Point Natural Heritage Trust to preserve 80 percent of the property — which eventually grows to over 1,000 acres — as “pristine.” As well, the Nature Conservancy and Maryland Environmental Trust hold conservation easements on the land. Much of the property is managed for scientific studies.
9/11, 2001 — Terror & Alarm
Terrorist attacks heighten fears of the vulnerability of a LNG terminal in close proximity to Calvert Cliffs Nuclear Power Plant. Protests follow.
October, 2001 — An Approval
The Federal Energy Regulatory Commission (FERC) approves resumption of LNG import at Cove Point. But re-commissioning stalls.
November, 2001 — Opposition Builds
Senator Barbara Mikulski joins the opposition. “FERC has once again made a premature decision on reopening Cove Point,” she says. “They’re saying ‘Damn the torpedoes, full speed ahead.”
Her appeal eventually fails.
2002 — Another New Owner
Dominion Resources, a Richmond-based energy giant, buys Cove Point.
2002 — Good to Go
The Federal Energy Regulatory Commission approves reactivation.
Dominion’s 87-mile pipeline connects with three major interstate pipelines in northern Virginia: Dominion Transmission, Columbia Gas, and Transcontinental Gas.
2003 — Shipments Resume
The first tanker, Norman Lady, arrives at Cove Point, the biggest of the United States’ four LNG ports.
2003 — Blanket Security
LNG tankers as big as football fields continue to arrive. A ship every 10 days is anticipated, rising to one every four days when winter increases demand. Tight security is promised, with the Coast Guard boarding vessels near Cape Charles and checking the crew names against the U.S. terrorism watch list.
Security zones extend 500 yards around each ship, accompanied by Coast Guard patrol boats. Fishermen complain.
2004 — Expansion
With demand high and prices up, plans are laid to double capacity to as much as two billion cubic feet of gas a day with anticipated arrival of some 150 LNG tankers yearly. In fact, arrivals top out at 80.
Plans call for huge new storage tanks and a 36-inch-pipeline alongside the existing line, cutting a 100-foot-wide swath through Calvert.
2004 — Protests Grow
Concerns About Pipeline Expansion organizes as grassroots existence. Federal hearings and citizen forums are packed and discussion heated on property rights, sightlines and safety.
If a pipeline can “override local program regulations,” can it also violate Maryland’s state Critical Areas law? Sara Leeland asks in a Bay Weekly commentary.
2005 — Environmental Deal
The Sierra Club bargains successfully to control “visual impact” of new LNG tanks from land or water. The deal also prevents major new construction on the site without consent of environmental partners.
2007 — Changing the Guard
Calvert’s Board of Commissioners agrees to assign 10 sheriff’s deputies to the Cove Point plant following the Coast Guard’s decision to stop providing security for the huge tankers as they unload. Dominion Energy says it will reimburse the county.
2008 — Another Cost of Energy
Bulldozers clear-cut a 50-foot-wide path through Calvert County for Dominion Cove Point Liquefied Natural Gas Facility’s second gas pipeline. After construction, the clearing will be reduced to 25 feet. Easement rights from 283 property owners — instead of eminent domain — open the route.
2009 — Still More Construction
After adding a second pipeline and two more new tanks, for a total of seven, Dominion plans to reinforce the offshore platform to accommodate the newest generation of LNG transport ships. Silt dredged from around the platform will restore a section of Cove Point beach breached by storms.
Before construction is complete, the bottom drops out of the LNG import market.
2010 — Fracking Boom
Hydraulic fracturing technology had been around for 60 years. But late in the first decade of the new millennium, the capacity for releasing natural gas from deep in the earth by fracturing rock with pressurized water goes big. Despite complaints from environmentalists, by 2010 fracking opens nearly 60 percent of new oil and gas wells worldwide.
2011 — Change in the Wind
U.S. prices paid for LNG are so low that many ships that would have docked at Cove Point go elsewhere in the world. Yet Dominion continues to profit under its middleman contracts with British Petroleum and Shell Oil.
“The idea of exporting is in its infancy,” Dominion spokesman Karl Neddenien tells Bay Weekly.
2011 — The Pivot
Soon after Neddenien’s comments, his company seeks Department of Energy approval for exporting LNG. Specifically, the company asks to export one billion cubic feet of LNG per day, exports going to any country with which the United States does not prohibit trade.
To transfer the direction of the LNG flow Donovan says, “All we need to add is liquefaction facilities. We have the tanks, the electrical generation, the dock and pipeline.”
The lure of new construction and tax receipts in the billions draws political support from Calvert Commissioners to Congressman Steny Hoyer. Dominion’s request to export LNG is the fourth in the nation.
2012 — Dominion Deals
Expecting approval, Dominion signs LNG export contracts with Japan and India. The Sierra Club is not impressed, arguing that its 40-year-old arrangement prevents exports and vowing to stand in the way of the company’s intention to expand.
January, 2013 — Victory in Court
The Calvert County Circuit Court rules that Dominion Cove Point is not prevented by previous agreements from exporting natural gas from its import terminal in Calvert County.
September, 2013 — ‘Massive Export Hub’?
Dominion wins DOE approval. Construction now waits on Federal Energy Regulatory Commission approval of facility and environmental safety, which includes securing a host of local, state and other federal agencies’ permits. Export would begin in 2017.
The company declares it has financing and capacity to proceed, and a key U.S. senator, Ron Wyden, D-Ore, says the DOE approval should be the last because more could have a significant impact on prices consumers pay and on energy security.
Earth Justice laments the decision, arguing that it “would transform a sleepy natural gas import facility on Chesapeake Bay into a massive export hub and hasten the already hectic pace of fracking.”