Proposed export terminal would send Marcellus gas to Japan, India

Last updated: July 12. 2014 11:35PM - 4059 Views
By Jon O’Connell joconnell@civitasmedia.com

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A pair of pending federal permit applications are just about the only things delaying gas drawn from Susquehanna County to be shipped to Japan and India.

The Atlantic Sunrise expansion, a $3 billion project now in its infancy, proposes to pump natural gas through parts of Wyoming and Luzerne counties, up to 350 million cubic feet of natural gas produced by Cabot Oil & Gas eventually to be delivered to a Calvert County, Maryland, export terminal called Cove Point, according to a recent Cabot news release.

At least one U.S. senator publicly has said he has concerns that deals like this could raise domestic energy costs.

Dominion Cove Point LLC has received conditional approval from the U.S. Department of Energy to build apparatus at an existing facility to convert gas to liquefied natural gas, or LNG, for export, according to application documents. Cove Point was built in the 1970s to import gas.

Dominion has commitment from two overseas companies: Pacific Summit Energy, a subsidiary of Sumitomo Corp. in Japan; and GAIL Global, a subsidiary of GAIL Limited of India, that each have contracted for 50 percent of the available capacity for 20 years, application papers say.

Dominion estimates it will be able to convert 1 billion cubic feet of natural gas per day, the application says.

Cabot Oil & Gas, a Houston, Texas, petroleum production outfit with virtually all of its Marcellus Shale investments in Susquehanna County, in December agreed to supply 350 million cubic feet of gas to Cove Point, about 35 percent of the terminal’s proposed capacity, the news release says.

Natural gas can be converted to liquid using a high-tech process in which it is chilled to about 260 degrees below zero. Liquefying natural gas makes it 600 times more compact.

There are six FERC-permitted LNG export terminals under construction, all along the Gulf Coast.

There are no existing ports that export gas extracted from Pennsylvania.

Senator’s concerns

A hot bed of contention, critics and anti-gas folks claim LNG export terminals will contribute to an increased natural gas price for consumers and possibly increase dependence on foreign energy sources, including imported LNG.

U.S. Sen. Ed Markey, D-Massachusetts, is pushing legislation that would require the Department of Energy to scrutinize any export applications to be sure the international transactions don’t threaten domestic prices and the U.S. gaining energy independence.

“If we cross this threshold and approve just a few more terminals, the spikes in natural gas prices could amount to an additional $62 billion tax on American consumers and businesses each year,” Markey said in a March news release.

The United States has no free trade agreement with India nor Japan. In its conditional approval letter, the federal energy department said it identified no potential negative impact to selling gas to these countries.

Industry representatives often have said that any new gas-dependent industry in the United States potentially could raise the price of natural gas.

And selling gas to foreign countries gives the United States leverage when it comes to bargaining with foreign heads of state, America’s Natural Gas Association Chief Economist Erica Bowman said earlier this year.

On May 29, the Department of Energy proposed new standards — similar to what Markey is suggesting — that will allow the department to gain a clearer picture of public interest when considering permit applications.

There are 13 FERC natural gas export terminal applications pending in the United States. Most of them are for Louisiana and Texas, one is in Georgia, and two are on the West Coast. Cove Point is the only proposed export terminal near the Marcellus Shale gas reserves.

“We should not give away the domestic economic and national security rewards of our natural gas boom, and then just hope that the market reduces the risk of international conflicts,” Markey said.

Atlantic Sunrise

The Transcontinental Pipeline, or Transco, is one of the nation’s largest natural gas pipeline systems.

It includes a network of 10,200 miles of pipelines from the Gulf of Mexico to Manhattan, dotted by loops and compressor stations along the way, all of which are owned and operated by Williams Companies Inc. out of Tulsa, Oklahoma.

Williams is currently in its pre-filing stage with FERC to determine a route that will bring the least possible environmental impact for an expansion that will up its capacity by nearly 20 percent: the Atlantic Sunrise.

Since it was went online in the 1960s, Transco has pushed gas in one direction from south to north. Now that the Marcellus Shale has made way for Pennsylvania to slip into the number-two state for natural gas production, ousting Louisiana, demand calls for a pipeline also to move Pennsylvania gas to the South.

Atlantic Sunrise includes a length of pipeline starting from Harford Township, Susquehanna County, through Wyoming, Luzerne and Columbia counties, then due south to connect with the main Transco pipelines in Lancaster County.

If FERC approves both applications, Atlantic Sunrise and Cove Point are slated to be completed in 2017.

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