Dominion Cove Point LNG, LP

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The Cove Point LNG Terminal is located near Lusby, Maryland on the western shore of the Chesapeake Bay, which receives imported liquefied natural gas and also stores gas.

Dominion Cove Point has a storage capacity of 7.8 billion cubic feet (BCF) and a daily send-out capacity of 1 BCF. The terminal connects, via its own pipeline, to the major Mid-Atlantic gas transmission systems of Transcontinental Gas Pipeline, Columbia Gas Transmission and Dominion Transmission. The terminal is currently owned by Dominion Resources.^[1]

1 History
2 Controversies
3 Notes
4 External links

[edit] History

The facility was originally certificated in 1972 for the purpose of importing Algerian LNG for resale by the Columbia and Consolidated Natural Gas systems. Cove Point received ship-borne LNG imports from Algeria between 1978 and 1980. At that time, the Algerians demanded an unacceptable price increase, and the terminal fell into disuse.

In 1994, the facility was transformed into a facility to store domestic natural gas. A liquefaction unit was installed which cools natural gas to the point that it becomes a liquid. The facility continued to use the original LNG storage tanks and gasifier units. Both the storage and import activity are subject to regulation by the Federal Energy Regulatory Commission under the Natural Gas Act.^[2]

In 2001, various parties agreed to resume imports at the facility, while continuing its storage operations. Following the construction of a fifth LNG storage tank, imports resumed in the summer of 2003. The importer are BG LNG, Shell LNG, and Statoil. In 2006, the Federal Energy Regulatory Commission authorized a further expansion of Cove Point's import capacity on an unregulated basis, with Statoil holding the expanded capacity.^[3]

[edit] Controversies

Because the LNG at Cove Point contains a higher heat content than domestic natural gas, the local gas utility, Washington Gas Light complained that its customers were adversely affected by this "hot" gas. As a result, the parties agreed to limit the heat content of the output of the terminal to 1075 Btu per Mcf by injecting Nitrogen into the gas stream.

Subsequently, Washington Gas Light has experience an increase in gas leaks in Prince Georges County, Maryland, which is served directly from the output of the plant. These leaks come from mechanical couplings which contain rubber gaskets. Washington Gas Light claims that because the Cove Point gas has less hexane and other heavy hydrocarbons than does domestic natural gas, the Cove Point gas causes the gaskets to dry out and leak. Cove Point disputes these claims and argues that its current expansion will not cause additional leaks in the District of Columbia and Virginia suburbs as the area served by unblended LNG expands.^[4]

In 2006, Cove Point filed a rate increase proposing to raise the prices it charges to customers in Georgia, North Carolina, Virginia and Maryland by 109 percent.^[5]