September 30, 2014 / 1:05 AM / 3 years ago

UPDATE 2-U.S. FERC approves Dominion's Cove Point LNG export facility

(Adds environmental group reaction)

By Ros Krasny

WASHINGTON, Sept 29 (Reuters) - U.S. federal regulators late Monday approved construction of Dominion Resources’ liquefied natural gas export project in Cove Point, Maryland.

Cove Point is the fourth U.S. LNG export project to get the green light to begin construction from the Federal Energy Regulatory Commission. It will be able to export up to 5.75 million metric tons of LNG a year when fully operational.

Dominion’s facility is one of about two dozen projects that hope to ship a growing bounty of domestic natural gas to countries in Asia and Europe.

The Cove Point site, a little more than an hour’s drive southeast of Washington, D.C. on Chesapeake Bay, boasts four large storage tanks and a pier built in the 1970s to import LNG from Algeria, underscoring just how much U.S. market dynamics have changed.

“We are pleased to receive this final approval that allows us to start constructing this important project that offers significant economic, environmental and geopolitical benefits,” said Diane Leopold, president of Dominion Energy.

Construction is estimated to cost between $3.4 billion and $3.8 billion, the company said, adding that it has fully subscribed the marketed capacity of the project with 20-year service agreements that will see LNG shipped to Japan and India.

In the past decade the United States has ridden a wave of hydraulic fracturing, or fracking, to become the world’s top gas producer.

FERC said approval came after more than two years of consideration during which the agency heard from more than 140 speakers at three public meetings related to its environmental assessment and received more than 650 comments from the public and federal, state and local agencies.

The project has been criticized by environmental groups. It lies close to hundreds of homes in the town of Lusby, a golf course and a state park, as well as the complex ecosystem of Chesapeake Bay itself, the largest estuary in the United States.

Several environmental and community groups denounced the decision, saying the export facility was a local risk but and provide more incentives for gas extraction by fracking in the mid-Atlantic region.

“Exporting LNG will mean more drilling and fracking, and that means more climate pollution, more risk of contaminated groundwater, and more threats to the health of people who live near gas wells,” said Deb Nardone, director of the Sierra Club’s Beyond Natural Gas campaign.

Other groups said they would considering legal challenges. “Ultimately we may have to take the case to court,” said Jocelyn D‘Ambrosio, associate attorney at Earthjustice.

FERC in May released results of its environmental assessment of Cove Point, showing the facility could be built safely with no significant impact to environment.

FERC has approved three other LNG export projects, all in the Gulf of Mexico: Cheniere Energy’s Sabine Pass, the Freeport LNG Development project and Sempra Energy’s Cameron facility. Fourteen other projects are pending with FERC with additional applications expected.

Reporting by Ros Krasny; Editing by Eric Walsh

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