Cove Point LNG owner Dominion says plant will begin LNG production in November
Dominion Energy (ticker: D) has a lot of faith in the financial benefits that it will derive when it flips the switch and begins to export U.S. natural gas from its $3.4 billion Cove Point LNG liquefaction and export facility in Maryland.
“We remain confident that our operating earnings for 2018 will increase by at least 10% from $3.65 per share midpoint of this year’s earnings guidance range, driven primarily by earnings from our Cove Point export facility, which will be in service later this year,” Dominion Energy CFO Mark F. McGettrick said on Dominion’s Q3 conference call yesterday.
The Cove Point LNG export project is located on the Chesapeake Bay in Lusby, Maryland, a stone’s throw from the prolific natural gas producing Marcellus shale and the fast-growing Utica shale play. Dominion will be the first east coast U.S. LNG exporter with a view straight across the Atlantic to European gas buyers.
Source: Dominion Energy Q3 presentation
“The Cove Point liquefaction construction is effectively complete and the facility is going through its advanced‐commissioning phase,” Dominion CEO Thomas F. Farrell said in the Q3 earnings release yesterday. The company said that the DOE had approved exporting of commissioning cargoes and FERC had approved introduction of hydrocarbons to generate LNG.
“We have completed the initial operating run on our steam turbine generators, Frame 7EA combustion turbines, and numerous motors, pumps, and compressors that are part of the liquefaction process,” Farrell said in his prepared remarks on the conference call. “The operation’s formal training is complete. We are fully staffed with trained and qualified operators. We will begin generating LNG next month and conclude commissioning in December and expect to be in-service by the end of the year.”
Dominion said Cove Point is designed to process an average of 750 million standard cubic feet per day of inlet feed gas.
Source: Dominion Energy archives
The liquefaction facilities will connect with the existing facility and share common facilities such as the LNG tanks, pumps, piping and pier in order to support both functions—importing and exporting LNG. Last March was the in-service date for the company’s ramp-up of additional horsepower at the existing Pleasant Valley Compressor Station in Fairfax County, Virginia.
“The project will enable Dominion to transport up to 860,000 dekatherms per day of natural gas from existing pipeline interconnects near the west end of the Cove Point Pipeline to the Cove Point terminal for the export of up to 5.75 metric tons of liquefied natural gas per year,” FERC said in its Sept. 2014 press release announcing its award of authorization for construction of Cove Point.
The Cove Point site was originally built in the 1970s to import LNG from Algeria, underscoring just how much U.S. market dynamics have changed, Reuters reported. Dominion in 2013 announced it had lined up 20-year service agreements to ship LNG from Cove Point to Japan and India.
Source: Dominion Energy archives
