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Nearly complete, Cove Point on track to be 2nd large US LNG exporter by year-end

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Nearly complete, Cove Point on track to be 2nd large US LNG exporter by year-end

Dominion Energy Inc.'s Cove Point liquefaction and export terminal is on track to enter service as the second LNG export project in the Lower 48 before the end of 2017, bringing total U.S. LNG export capacity to more than 3 Bcf/d.

The roughly $3.8 billion Maryland export facility on Oct. 16 asked the Federal Energy Regulatory Commission for permission to introduce the chemicals used to cool natural gas to a liquid and to start other commissioning activities beyond those already authorized. A Dominion spokesman said the project is now 96% complete and remains on schedule to be finished in the fourth quarter.

Once in service, a single liquefaction train will add 5.25 million tonnes per annum to U.S. LNG export capacity. Cheniere Energy Inc.'s operational Sabine Pass terminal in Louisiana just brought online a fourth train, bringing the total capacity at the facility to 18 mtpa. Natural gas deliveries to Sabine Pass reached more than 3 MMDth/d for the first time Oct. 15, surpassing a previous daily high in September of 2.94 MMDth/d.

When using the U.S. Department of Energy's conversion method, the 23.25 mtpa capacity from Sabine Pass and Cove Point equals about 3.1 Bcf/d.

SNL Image

Dominion's Cove Point liquefaction terminal in Maryland.

Source: Dominion Energy Inc.

Of the six LNG export projects under construction in the U.S., Cove Point is one of two being built on the East Coast. Its location gives shippers closer access to markets in Europe than Gulf Coast projects, a benefit White House economic adviser Gary Cohn lauded in the Trump administration's first public remarks in support of the U.S. LNG export industry.

Cove Point has contracts with Japan's Sumitomo Corp. and GAIL (India) Ltd., though where the bulk of fuel from the export terminal heads will be determined in part by the spot market. Sabine Pass has contracts with BG Group, Gas Natural Fenosa, Korea Gas Corp. GAIL, Total SA and Centrica Plc, but Mexico has emerged as the biggest home for volumes from the facility.

While global demand is growing, the LNG market still favors buyers. GAIL has repeatedly been reported as seeking to renegotiate its contracts with Sabine Pass and Cove Point. Dominion spokesman Karl Neddenien declined to comment on the media reports.

Dominion CEO Thomas Farrell said in a second-quarter earnings call that the developer has an agreement with a third party for cargoes that will be produced during the commissioning process. The U.S. Department of Energy in June authorized Cove Point to export the equivalent of 250 Bcf of natural gas in commissioning cargoes over two years. (FERC docket CP13-113)