UPDATE 3-Dominion eyes Cove Point LNG export by 2015
* Plant would export natgas produced at Marcellus shale
* Follows similar plans from other U.S. LNG importers
* Dominion to work with Statoil on potential export (Adds detail on conditions to proceed)
NEW YORK, Feb 1 (Reuters) - Dominion Resources Inc (D.N) is considering plans to build a liquefied natural gas export plant on the site of its existing import terminal at Cove Point, Maryland, by 2015, a company spokesman said on Tuesday.
Dominion follows other LNG terminal developers looking to switch plans and export U.S. natural gas overseas as ample domestic supply outstrips tepid demand.
"The earliest for the liquefaction plant would be 2015," the spokesman said.
The export plant would source gas from the prolific Marcellus shale gas field, which stretches across two thirds of Pennsylvania and parts of surrounding states.
LNG is natural gas cooled to a liquid for transport in tankers to markets overseas.
Late last week, Dominion Chief Executive Tom Farrell spoke about the export plans at the release of the company's fourth-quarter results.
"We have discussed the potential for liquefaction facilities at Cove Point with a number of very major companies," Farrell said on a conference call Friday.
Farrell said that Dominion will proceed with the project if it is tied to long-term supply and offtake agreements.
He said that Dominion will work with Norway's Statoil (STL.OL), which has import capacity at Cove Point and production acreage in Marcellus, to build a connection between Marcellus and the proposed export plant.
"If you think about Cove Point, where it sits there in the Mid-Atlantic, a couple hundred miles from the Marcellus region, it has got all the facilities it needs other than the liquefaction itself," Farrell said.
The spokesman said on Tuesday that Dominion was in discussions with natural gas producers at Marcellus.
Dominion has not said how the project would be financed or how much it would cost.
Dominion's move is part of a wider change in the U.S. gas market where increased supply outstrips demand, thanks to huge rises in shale gas production.
Most U.S. LNG import terminals built on the expectation that the U.S. would be a major LNG importer now sit largely idle as shippers send their gas to higher-paying markets in Asia, Europe and South America.
Shipments to Cove Point have dropped significantly over the last few years, from 220 billion cubic feet (bcf) in 2005 to 147 bcf in 2007 and 43 bcf in 2010, according to figures from Waterborne LNG analysts in Houston.
Statoil wrote down the value of the terminal last year, due to increases in U.S. domestic gas supply. [ID:nLDE66S0ZY]
As part of Dominion's plan to build a liquefaction plant, Statoil's import contract to Cove Point has been shortened to ten years from 18.
Last June, Cheniere Energy (LNG.A) announced plans to build a liquefaction plant at Sabine Pass in Louisiana, on the site of its existing import terminal. Cheniere plans to export LNG by 2015.
Private developer Freeport LNG announced similar plans for its Texas terminal in November.
These other projects will likely include facilities to export and import LNG, but the Dominion spokesman said that it will likely focus only on export. (Editing by Alden Bentley)
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