Local Gas To Be Sent To Asia

NATRIUM – Natural gas drawn from the Upper Ohio Valley could be used to heat homes in Tokyo and New Delhi, pending Dominion Resources’ completion of a $3.8 billion gas liquefaction project in Maryland.

Dominion is seeking permission from the Federal Energy Regulatory Commission to complete the Cove Point project, at which the company would collect natural gas from the eastern United States. Dominion plans to liquefy, store and load the gas into ships brought to the facility on the Chesapeake Bay. Subject to regulatory approval, the facilities could be in service by 2017.

“Japan and India are important allies and trading partners of the United States that are in need of secure sources of natural gas,” said Thomas F. Farrell II, Dominion chairman, president and chief executive officer.

While the gas liquefied at Cove Point may be extracted from a variety of areas, Farrell said Cove Point will be a premier facility in terms of “direct access to the Marcellus and Utica shale plays,” which he described as two of the most prolific natural gas basins in North America.

“No other proposed liquefaction facility can provide the strategic value in terms of supply and location,” Farrell said, noting his company is “well positioned to obtain permission from the U.S. Department of Energy to move forward with this vital infrastructure project.”

The $500 million Dominion Natrium plant now being built in Marshall County is part of a $1.5 billion processing and transportation venture between Dominion and Caiman Energy known as Blue Racer Midstream. This network includes facilities across northern West Virginia and eastern Ohio that will move gas and liquids out of the Marcellus and Utica shale formations.

With continued development, the system could eventually transport “at least 2 billion cubic feet of natural gas per day,” according to Blue Racer. Officials with both Dominion and Caiman believe the plant’s location along the Ohio River in Marshall County will allow it to be a centerpiece in the burgeoning Utica and Marcellus shale industries in Ohio and West Virginia.

Chesapeake Energy, currently the Upper Ohio Valley’s most active natural gas driller, has agreed to supply the Natrium facility with its gas stream.

Dominion officials said Sumitomo Corp. of Japan and GAIL Global LNG, a U.S. affiliate of GAIL (India) Ltd., have each contracted for half of the marketed capacity at Cove Point. Sumitomo, in turn, has announced agreements to serve Tokyo Gas Co. and Kansai Electric Power Co. Inc.

“We believe the agreements we have signed serve very important economic goals for all three nations,” Farrell said.

Dominion officials said a study shows the project will create as many as 4,000 jobs for the state of Maryland, with another 14,600 jobs created once the Cove Point facility opens. The project would produce an estimated $9.8 billion in royalty payments to mineral owners over 25 years, while generating about $1 billion annually for federal, state and local governments.

House Minority Whip Steny Hoyer, D-Md., supports the Dominion Cove Point project.

“The proposed Cove Point LNG liquefaction project has the potential to make a significant contribution to southern Maryland’s economy,” Hoyer said. “Today’s announcement helps to ensure the project’s viability and moves us closer to the job creation that its development is expected to bring to Calvert County and to Maryland.”