Gas producers, eager to find new markets, are promoting LNG as a way to improve the nation's balance of trade and to boost domestic job growth. Some consumers, including the powerful petrochemical industry, say exports will drive up prices and retard manufacturing. Environmentalists fear harm from more drilling.
Natural gas must be purified and supercooled into liquid to be transported by ship. Upon arrival at destination markets, the LNG is converted back into gas.
Dominion says the plant would generate 4,000 direct and indirect jobs during construction, produce an estimated $9.8 billion in royalty payments to mineral owners over 25 years, and spin off $1 billion annually in federal, state and local government revenues.
It also would stimulate more drilling in Pennsylvania, where Marcellus production has subsided because an oversupply has driven down prices. "This may be an opportunity for them to return to drilling like they were before," said Daniel E. Donovan, a Dominion spokesman.
Dominion's proposal awaits a key license from the Department of Energy to export LNG to non-free-trade nations, which include Japan and India. Dominion's application is third in line out of more than 20 awaiting review by the energy department. Most of the plants are on the Gulf Coast.
The Dominion project would add export capability to a 35-year-old plant that was built to import natural gas. Dominion says its project would be cost-effective because much of the infrastructure is already built, including the huge insulated storage tanks to contain the LNG at 260 degrees below zero.
The Cove Point facility, located about 60 miles southeast of Washington on the Chesapeake's western shore, is a monument to the fickleness of natural gas markets. It remained open only two years after it opened in 1978 because domestic prices subsided and it no longer made sense to import LNG.
Dominion bought it for $212 million in 2002 and has invested $1.3 billion in upgrades to the plant and infrastructure since then. The plant is effectively idle now because imported LNG can't compete with domestic fuel.
Dominion still occasionally brings in vessels of LNG. The money-losing imports are required to keep the terminal's equipment, designed to operate at subzero temperatures, in a comfortably frosty state.
Dominion on Monday announced an agreement with a subsidiary of GAIL Ltd., a state-owned Indian gas distribution company, to take half the plant's daily capacity of 660-million cubic feet of gas. Sumitomo Corp. had previously agreed to take the other half for delivery to Japanese utilities.
Under the agreements, Dominion collects a fee for transporting and processing the fuel, but the exporters will own the natural gas.
Contact Andrew Maykuth at 215-854-2947, @Maykuth or email@example.com.