Dominion Authorized to Export LNG to Non-FTA Countries

Dominion requested a 25-year authorization period.  The DOE, however, limited the authorization to 20 years, pointing out that Dominion’s contracts with Sumitomo and GAIL have a duration of twenty years with renewal options.  The DOE also noted that the studies on which  its public interest determination rely have a twenty year horizon.  Likewise, despite the fact that Dominion had requested authorization to export up to 1 billion cubic feet of gas per day (“Bcf/D”), the DOE limited its authorization to 0.77 Bcf/D, observing that this total is consistent with the planned capacity of Dominion’s liquefaction facility.  The DOE also ruled that this amount is not additive with the 1 Bcf/D of LNG it had previously authorized Dominion to export to FTA nations in 2011.  Dominion may export 1 Bcf/D total, of which 0.77 Bcf/D may be exported to non-FTA countries.

As discussed in our May 21, 2013 post on the DOE’s order authorizing Freeport to export LNG to non-FTA countries, the DOE commissioned economic studies from NERA Economic Consulting and the Energy Information Administration, on which it based its conclusion that the United States will likely enjoy net economic benefits from LNG exports.  The DOE relied on these same studies to support Dominion’s authorization, as well as additional studies provided by Dominion from Navigant Consulting, Inc. and ICF International.  

Dominion plans to commence construction of the liquefaction facilities at its Cove Point Terminal in the first quarter of 2014, with an in-service date of 2017.  The facility, which is currently configured for LNG imports, dates from the 1970s, but was inactive from 1980 until 2001.  Since resuming operations, it has undergone several expansions and upgrades, most recently receiving authorization in 2009 from the Federal Energy Regulatory Commission (“FERC”) to expand its off-shore pier to accommodate larger vessels.  Dominion still requires authorization from FERC to install the liquefaction facilities,² a process that will include an environmental review.  The DOE’s export authorization is conditioned on FERC approval.