UPDATE 1-Dominion's LNG export project clears environmental hurdle

Thu May 15, 2014 2:11pm EDT

(Adds background, details from report, comment from environmentalists, share price)

By Ayesha Rascoe

WASHINGTON May 15 (Reuters) - Dominion Resources' bid to export liquefied natural gas from the coast of Maryland cleared a major hurdle on Thursday with a favorable environmental review from federal regulators.

The Federal Energy Regulatory Commission's review of Dominion's Cove Point found that the project would not have a significant impact on the environment since it would be built in the same area as the company's existing import facility.

In a 241-page report, FERC said the project would have minimal effects on wetlands, vegetation and wildlife if it takes appropriate mitigation measures such as spill prevention and wetland erosion protections.

FERC also concluded that the project had "sufficient layers of safeguards" to prevent accidents and to protect public safety.

With its environmental review complete, analysts have said in recent months they expect FERC to make a decision on the project some time this summer.

Located about an hour's drive from Washington, D.C., Cove Point has been a target for environmentalists concerned about pollution from the shale gas boom that paved the way for LNG exports.

Green groups and local residents blasted the FERC's decision to issue an environmental assessment, saying a more robust environmental impact statement would allow in-depth analysis of the greenhouse gas emissions that could result from the project and would provide more opportunities for public input.

In response to the opposition, FERC has agreed to hold a public meeting to gather comments on its assessment.

Dominion defended the commission's decision to forego the more detailed analysis.

"This project will be built within the existing footprint and fence line of an industrial site," said Diane Leopold, president of Dominion Energy. "There is no need for additional pipelines, storage tanks or permanent piers, thus limiting its impact and making an environmental assessment appropriate."

Unlike impact statements, environmental assessments prepared by federal agencies are meant to be concise documents without an abundance of long descriptions or detailed data.

But a mere assessment "isn't up to the task of weighing these impacts," said Nathan Matthews, an attorney for the Sierra Club. Green groups have threatened to challenge the report in court if they deemed it insufficient.

Dominion has strongly disputed those complaints, arguing that the project will actually help reduce global greenhouse gas emissions by replacing coal-fired power generation, and that it will not make a big difference to shale gas development.

Companies need approval from both the Department of Energy, which determines whether the proposed exports would be in the public interest, and FERC, which assesses environmental and safety effects of the projects' construction and operation.

Cove Point earned conditional approval from the Energy Department last year to export 0.77 billion cubic feet a day of natural gas.

Most of the exports from the Maryland terminal, once it is operational, are expected to be headed for Asia.

Dominion shares were down 0.7 percent in afternoon trading on the New York Stock Exchange, at $69.42.

(Reporting by Ayesha Rascoe, editing by Ros Krasny and Diane Craft)