Cove Point LNG

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Dominion Cove Point LNG is an LNG import terminal located on the Chesapeake Bay in Lusby, Maryland, south of Baltimore. It is one of the nation's largest liquefied natural gas (LNG) import facilities.

Dominion, the terminal's owner, acquired Cove Point import terminal from energy infrastructure company Williams on September 5, 2002, and began receiving shipments in the summer of 2003. In 2009, Dominion finished an expansion project that increased Cove Point's storage and production capacity by nearly 80 percent.[1] Export facilities are currently under construction.

Location

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Background

Dominion Cove Point received authorization on October 7, 2011 from the Department of Energy to enter into contracts to export liquefied natural gas. Under the authorization, Dominion is permitted to enter into multi-year contracts for up to 25 years with companies wishing to export natural gas to countries with free trade agreements. The authorization is for up to 1 billion cubic feet per day. Dominion would have to add liquefaction equipment at its Cove Point facility to convert natural gas into liquefied natural gas.[1]

The Sierra Club challenged the DOE authorization. SC and Maryland Conservation Council challenged construction of the Cove Point LNG import terminal, and SC said their 1972 settlement with then owner Columbia Gas System Inc. bound Columbia and any future terminal owners to LNG imports -- not exports -- for use of the land, and requires the approval of the environmental groups for any expansions.[2]

On Sep. 11, 2013, the DOE determined "that the opponents of the [Dominion Cove Point] Application have not demonstrated that the requested authorization will be inconsistent with the public interest and finds that the exports proposed in this Application are likely to yield net economic benefits to the United States." Subject to environmental review and final regulatory approval, the facility is conditionally authorized to export at a rate of up to 0.77 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years.[3]

In September 2014 the Federal Energy Regulatory Commission approved construction of the export terminal.[4] FERC declined to examine the broader climate impact of the fracked gas that Cove Point would carry. Cove Point is expected to start shipping for export in late 2018, and could export upward of 1 billion cubic feet of LNG per day, based on its DOE authorization.[5]

The owners and operators of the Cove Point plant won another court victory in Calvert County in February 2016. The environmental group, Accokeek, Mattawoman, Piscataway Creeks Communities Council, Inc. petitioned a judicial review of the Maryland Public Service Commission’s authorization of Cove Point; however, the review affirmed earlier rulings on the matter. The Accokeek, Mattawoman, Piscataway lawyer told BayNet he would appeal [6]

Commercial LNG deliveries from Cove Point began in April 2018.[7] Gail India has agreed to buy 2.3 million metric tons of LNG a year over the next two decades from Cove Point.[8] Approximately 2.3mtpa are planned to be exported to Japan: 1.4mtpa to Tokyo Gas Group and 0.8mtpa to Kansai Electric Group. These contracts are understood to be 20 year 'take or pay contracts' - fixed monthly cargo volumes and prices are agreed between producers and buyers with very limited flexibility - which means that Cove Point is not susceptible to record low Asian LNG prices in March 2020.[9]

In October 2019, Dominion sold a 25 percent non-controlling equity stake in Cove Point to Brookfield Super-Core Infrastructure Partners for just over US$2 billion.[10]

In July 2020, Warren Buffett’s Berkshire Hathaway Inc. Energy Company announced that it will acquire a 25% stake in the Cove Point LNG export, import and storage facility. Dominion Energy will continue to own 50% of Cove Point, with Brookfield Asset Management continuing to own the remaining 25% share. Berkshire Hathaway Energy will operate the Cove Point facility once the transaction closes, which is expected in the fourth quarter of 2020 following regulatory approvals.[11]

Opposition

There has been active opposition to Cove Point from the permitting process of the original import facility to present-day resistance to Dominion's expansion to an export facility.

We Are Cove Point, a coalition of people and organizations working together to stop the Cove Point export terminal, was founded in 2012 and has been actively organizing since.[12]

On May 30th, 2015 about 200 people marched from Solomons Island to Cove Point LNG in opposition to the export terminal.[13]

In November 2015 activists rappelled from the upper deck of a Monday night football game in Charlotte, NC and unfurled a banner protesting Bank of America's funding of the terminal.[14]

Part 1: Activist Who Shocked ‘Monday Night Football’ Reveals Story

Further, We Are Cove Point announced in February 2016 it would throw a nine-day event called “Cove Point Spring Break.” [15]

Financing

Financial close for the project took place in September 2018. US$3 billion in debt financing was agreed for the project, estimated to have overall costs of US$3.4-3.8 billion. A consortium of 21 international commercial banks are involved in the loan, with the largest tranches of US$250 million coming each from Mitsubishi UFJ, Mizuho, Sumitomo Mitusi, JPMorgan and Scotiabank.[16]

In January 2020, Dominion Energy was forced to sell a 25% stake in Cove Point LNG to Brookfield Asset Management after falling into debt in 2018 following its acquisition of competitor Scana Corp by issuing $7.9 billion in new stock and assuming $6.7 billion of the target's debt. The acquisition of the stake in Cove Point LNG involved Brookfield Asset Management providing US$775 million in equity with an accompanying bond issue of US$1.325 billion coming from SMBC Nikko Securities, MUFG, Mizuho and Scotiabank.[17] Despite this setback, deriving from a taxation rule change introduced by the US Federal Energy Regulatory Commission, as of February 2020 Dominion appeared to have weathered the storm by selling off the portion of Cove Point.[18]

Export Project Details

  • Operator: Dominion Energy Cove Point LNG[19]
  • Owner: Dominion Energy 75%, Brookfield 25%[19]
  • Location: Lusby, Maryland, United States
  • Coordinates: 38.3913422, -76.4045082 (exact)
  • Capacity: 5.25 mtpa[19]
  • Status: Operating
  • Type: Export
  • Start Year: 1972, then retired in 1979.[20] Exports restarted in 2018.[21]
  • Financing: US$3 billion debt financing from 21 international commercial banks, including Mitsubishi UFJ, Mizuho, Sumitomo Mitusi, JPMorgan and Scotiabank[16]

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Import Project Details

  • Operator: Dominion Energy Cove Point LNG[19]
  • Owner: Dominion Energy 75%, Brookfield 25%[19]
  • Location: Lusby, Maryland, United States
  • Coordinates: 38.3913422, -76.4045082 (exact)
  • Capacity: 13.7 mtpa[19]
  • Status: Operating
  • Type: Import
  • Start Year: 1978[19]

Note: mtpa = million tonnes per year; bcfd = billion cubic feet per day

Citizen groups

Industry groups

Articles and resources

References

  1. 1.0 1.1 "Dominion Cove Point LNG," Dominion Cove Point website, accessed April 2012.
  2. Ayesha Rascoe, "Sierra Club To Fight Dominion Hub Using 1972 Deal," World Environmental News, April 27, 2012.
  3. "Dominion Cove Point receives authorization to export LNG to non-free trade countries," LNG Global, Sep 11, 2013.
  4. "UPDATE 2-U.S. FERC approves Dominion's Cove Point LNG export facility," Reuters, Sep 30, 2014
  5. Elana Schor, "Cove Point ruling bodes ill for greens’ LNG fight back," Politico, September 30, 2014
  6. Marty Madden, "Court rules in favor of gas plant operators," BayNet, February 21, 2016.
  7. "Cove Point LNG Project in the U.S. starts commercial operation," Sumitomo Corporation, Apr. 16, 2018.
  8. Tim Daiss"EIA Report Sounds Somber Note For U.S. LNG" Forbes, March 7, 2016.
  9. "Dominion Energy: Dividend Love In The Time Of Coronavirus," Seeking Alpha, Feb. 12, 2020.
  10. "Dominion Energy sells 25 percent stake in Cove Point" Offshore Energy, Oct. 21, 2019.
  11. "Berkshire Hathaway Inc. Energy Company to Acquire Dominion Energy Gas Transmission and Storage Business" Berkshire Hathaway Energy, Jul. 5, 2020.
  12. About We Are Cove Point, Accessed 18 July 2017.
  13. Marty Madden, "When Police Harass Cove Point Protesters, Is Dominion Getting What It Paid for?," Truthout, June 8, 2015.
  14. Activists Suspended From Upper Deck of Stadium During Monday Night Football to Protest Bank of America Financing of LNG Export Terminal, We Are Cove Point, accessed June 2020
  15. Marty Madden, "Court rules in favor of gas plant operators," BayNet, February 21, 2016.
  16. 16.0 16.1 "Dominion Cove Point LNG Facility," IJGlobal, Sep. 2018.
  17. "Acquisition of 25% in Dominion Cove Point LNG Facility," IJGlobal, Jan. 30, 2020.
  18. "The 1 Thing to Watch at Dominion Energy in 2020," The Motley Fool, Feb. 1, 2020.
  19. 19.0 19.1 19.2 19.3 19.4 19.5 19.6 The LNG Industry: Annual Report 2020, page 38, International Group of Liquefied Natural Gas Importers, accessed April 29, 2020
  20. Dominion Cove Point LNG Wikipedia, accessed March, 2019.
  21. History Dominion Energy, March 2019.