* Group says exports will raise prices, harm environment
* Companies seek to export abundant U.S. shale gas
* US DOE weighing whether exports are in national interest
WASHINGTON, Feb 7 (Reuters) - The Sierra Club is challenging plans to export liquefied natural gas from Maryland, continuing its fight against the gas industry's push to sell the nation's abundant shale gas abroad.
The group filed a formal objection with the Energy Department against Dominion's Cove Point export project, arguing that exports of liquefied natural gas would raise prices for consumers and expand use of "destructive" drilling techniques to extract shale gas.
"Liquefied natural gas is not only the dirtiest and most polluting form of gas, but it also requires an increase in fracking; a process we know to be unsafe and dangerous," Deb Nardone, director of the group's natural gas reform campaign, said in a statement.
The group called on the government to undertake an environmental review that weighs the effects of drilling for shale gas, an assessment that has not been included in previous evaluations of gas export terminals.
The issue of LNG exports has become an increasingly hot button issue as some lawmakers raise concerns that exports could make natural gas more expensive for U.S. households and manufacturers.
Industry groups contend that exports are needed to maintain strong domestic production, especially as the current gas glut forces companies to cut back on output.
Advances in fracking, which involves injecting a cocktail of water, sand and chemicals under ground to release the fuel, have transformed the U.S. oil and natural gas industry.
Several years ago the industry was preparing to import LNG to meet U.S. energy demands, but thanks to the sharp increase in domestic shale gas production, companies are now seeking rights to export gas from more than half a dozen terminals, including Cove Point.
Critics of shale gas production say fracking threatens drinking water and allowing exports would increase the practice. Environmentalists also charge that the amount of energy needed to produce LNG is on par with coal.
Shale gas drillers strongly dispute the notion that fracking is unsafe, saying the practice has been carried out for decades without significantly harming the environment.
The Sierra Club has challenged two other terminals and plans to actively oppose all planned export projects.
Cheniere Energy received an export permit for its Sabine Pass terminal and has applied for another permit for a second project. Companies including Southern, BG and Sempra are also in the queue.
Under U.S. law, the Energy Department cannot deny exports to 15 countries that have bilateral free trade agreements with the United States, a list that will soon expand when pacts with South Korea, Colombia and Panama take effect. Exports to other countries are reviewed on a case-by-case basis.
The Energy Department is currently conducting a study evaluating whether LNG exports are in the national interest, which is expected to be released in the next few months.
"This is a historic and precedent setting moment," said Christopher Smith, deputy assistant secretary in the department's Office of Fossil Energy, at a utility commissioners' meetings on Tuesday.
Smith said the government would consider a number of factors including the impact on prices, energy security and the nation's trade balance as it evaluates whether projects should go forward.