Wednesday, October 08, 2008

FERC Reauthorizes Dominion Cove Point LNG Expansion

If Dominion builds one or more nuclear reactors near Richmond, Virginia, combined with the recently approved 500,000 volt transmission line and the liquefied natural gas facility expansion described below, they will become a dominant utility force in the Washington, D.C. region. If Warren Buffet beats Electricite de France (EdF)/Kohlberg Kravis Roberts & Company (KKR) in the purchase of Constellation Energy Group, a new nuclear reactor will probably not be built at the Calvert Cliff's location. This situation would leave Dominion with a major LNG import facility and new nuclear power capacity--a clear advantage in the region. AES is trying to build another LNG facility in Baltimore.

A $740 million expansion of the Cove Point LNG facility was reauthorized on October 7, less than three months after a federal court sent the issue back to the Federal Energy Regulatory Commission. The U.S. Court of Appeals for the District of Columbia circuit remanded the issue to the FERC after gas provider Washington Gas complained that Cove Point liquefied natural gas had contributed to a series of gas leaks in Prince George's County in 2003, 2004 and 2005. A gas leak in 2005 resulted in the explosion of a District Heights house. No one was injured, but a subsequent Washington Gas study found the imported gas was drying out rubber pipe seals, leading to leaks. FERC concluded that the Washington Gas arguments against the facility's gas were "based on a flawed analysis." FERC concluded that "other factors, namely the application of hot tar to the coupling seals as a means of corrosion control, the increase in operating pressures on (the) system, and colder temperatures were primarily responsible for the leaks." AAEA agrees with this conclusion.

Dominion began construction on two additional LNG storage facilities and a 47-mile pipeline in Southern Maryland in 2006 and expects to finish the expansion by the end of 2008 or the start of 2009. Cove Point will now have the capability to provide natural gas to several million more homes in Southern Maryland, New York and Pennsylvania. (WTOP News, 10/8/08)

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