U.S. panel backs plan to reopen LNG terminal

Houston company wants to expand Cove Point facility

Shipping hoped in 2002

October 12, 2001|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

A plan to reactivate and expand the Cove Point liquefied natural gas terminal in Calvert County was approved yesterday by the Federal Energy Regulatory Commission.

The Williams Cos. Inc., which bought Cove Point from Columbia Energy Group last year for $150 million, wants to resume shipping to the facility in Lusby by April 1. Williams also wants to build a fifth storage tank on the site that would be capable of holding 850,000 barrels of the liquefied gas, or LNG.

But in allowing Williams to continue with its plans, FERC also placed several conditions on the Houston-based company, including orders to develop an emergency response plan, onshore and offshore spill prevention plans and other environmental measures.

Cove Point must also receive approval from the Coastal Management Program before reopening, FERC said.

"The commission's authorizations are being granted based upon its findings ... that Cove Point's proposed open access LNG tanker discharging services for LNG import shippers will serve the public interest by providing needed new gas suppliers for major Eastern United States markets," FERC said in a draft of the order, which will be issued soon.

Williams said that Cove Point would become the largest LNG import facility in the country with the company's $103 million plan to upgrade the terminal. The company plans to overhaul the terminal's 1970s-era controls and safety systems, replace manually operated switches and dials with a centralized computer-operated command center, and install in all buildings remote sensors that can detect a match-size flame from 100 feet away. Williams could also hire up to 60 workers.

"Although we haven't had a chance to review it in detail, we're pleased with the order," said Gary Lauderdale, senior vice president and general manager of Williams' Transco Pipeline, in a prepared statement. "We appreciate all the work done by the FERC staff in issuing the order authorizing the reactivation of our Cove Point facility. It allows Williams to play a vital role in providing additional natural gas supply to serve the growing demands of the mid-Atlantic."

Calvert County commissioners estimate that the reopening of the terminal would yield $2 million a year in tax revenue for the Southern Maryland county.

The Cove Point plant, built in 1974, was originally authorized to operate a terminal and pipeline facilities to import LNG - natural gas that is converted into a liquid after being cooled to approximately minus-260 degrees Fahrenheit - from Algeria.

The LNG is warmed to air temperature at the terminal, which converts it back to a gas, and pumped through underground pipelines along the East Coast to heat and light millions of homes and businesses.

Shipments of LNG to Cove Point began in 1978, but were stopped in 1980 after suspension of LNG imports because of a pricing dispute with the Algerian government. Six years ago, parts of the facility were recommissioned for use as a natural gas storage site.

But nearby residents, who opposed Williams' plans, say they are worried about their safety. In their objections presented to FERC, they expressed fears that explosions at Cove Point could affect Calvert Cliffs Nuclear Power Plant, about three miles north. They also worried about terrorist attacks on the LNG tankers that will be coming up the Chesapeake Bay to the terminal.

"I am disappointed, but not surprised," said Mary Robinson, a resident of Lusby who lives about three miles from the terminal and opposes Williams' plans.

"I felt all along that this was pretty much a fait accompli. In view of the most recent events, I'm more concerned about terrorism than ever. My question is, what is to protect the citizenry from this? So we'll just wait and see what happens, I guess."

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