On September 29, 2014, FERC authorized Dominion Cove Point LNG, LP (“Dominion Cove Point”) to build and operate its proposed Cove Point Liquefaction Project, which would allow Dominion Cove Point to export up to approximately 5.75 million metric tons of gas each year from its LNG terminal facilities located in Calvert County, Maryland.  According to Dominion Cove Point, the company has already accepted FERC’s order, and has indicated that it intends to complete construction of the project so that the facilities can start exporting LNG in June of 2017. 

In its order, FERC approved two separate sets of proposals from Dominion Cove Point.  First, under section 3 of the Natural Gas Act (“NGA”) – which provides FERC authority for the siting and construction of LNG import or export facilities – FERC authorized the construction of Dominion Cove Point’s proposed LNG export facilities.  Second, under section 7 of the NGA – which gives FERC the authority to issue certificates of public convenience and necessity for facilities engaged in the transportation of natural gas in interstate commerce – FERC approved the installation of additional compression and certain upgrades to existing facilities that will help Dominion Cove Point deliver gas to its LNG terminal.

FERC’s decision focused on the possible environmental impacts as a result of Dominion Cove Point’s proposed project.  In its analysis, FERC explained that it heard from numerous speakers at multiple public meetings related to the environmental impact of the proposed project, in addition to more than 650 comments received from the various public, federal, state and local agencies.  In approving the construction of the export terminal facilities, FERC identified 79 conditions that would need to be implemented by Dominion Cove Point in order to mitigate potential adverse environmental impacts as a result of the proposed facilities.

The existing Dominion Cove Point LNG Terminal was initially authorized by FERC in 1972 in order to receive natural gas imports and to transport that natural gas to U.S. markets.  In 1994, FERC authorized the addition of a liquefaction unit to liquefy domestic natural gas in order to provide LNG peaking and storage services.  According to FERC’s order, Dominion Cove Point’s proposed changes will allow the resulting facilities to receive and vaporize imported LNG, or to liquefy domestically-produced natural gas for loading onto LNG vessels for export.

Going forward, Dominion Cove Point is expected to file an implementation plan at FERC while asking for a notice to proceed with construction on the proposed Cove Point Liquefaction Project.  While FERC has authority over siting and construction of LNG export facilities, Dominion Cove Point has already received approval from the Department of Energy to export natural gas from its LNG terminal to both free-trade and non-free trade agreement countries.

FERC’s order marks the fourth LNG export project approved by FERC to date.  As of FERC’s order, there were fourteen other LNG export projects pending at FERC.  To view a copy of the order, click here.