June 22, 2003|BY A SUN STAFF WRITER
Four hundred workers on the banks of Chesapeake Bay at Cove Point were laboring furiously in the rain last week, pouring concrete, laying fiber optics and welding steel to renovate a liquefied natural gas terminal mothballed since 1980.
There was little time to spare.
The first tanker loaded with the liquid form of natural gas, called LNG, is expected at the Calvert County terminal at the end of July. It will pull up to Cove Point's pier a mile offshore and pump millions of gallons of the frigid fuel through submerged insulated steel pipes and into four giant storage tanks on land.
The ship will be the first of several dozen LNG vessels expected to make that same trip to Southern Maryland this summer from natural gas fields around the world.
Cove Point LNG, which will be the largest operating in the country, is being resurrected as the nation grapples with rising natural gas prices and the tightest supply in a quarter century.
The supply crunch has gotten attention in Washington. This month, Federal Reserve Chairman Alan Greenspan warned a congressional panel that rising prices and dwindling supplies could further damage the weakened economy and urged the country to expand its ability to import LNG.
"He all but named Cove Point," said Daniel Donovan, spokesman for Dominion Resources Inc., which purchased the LNG terminal in September from financially strained Williams Cos. for $217 million.
With gas prices up more than 70 percent in a year, it's no wonder that Dominion is spending another $180 million to upgrade the Cove Point terminal, build a fifth storage tank and refurbish the aging pier that seagulls had claimed as home.
LNG is profitable when natural gas prices reach $2.50 to $3.50 per million British thermal units, according to study by the Institute for Energy Law & Enterprise at the University of Houston. Prices now are well above $6 per million Btu.
"This is the furthest the plant has come," said Chris Buffalini, a control room operator who has worked at Cove Point for five years. "I'm really looking forward to the ships coming in."
A number of those who live near the terminal - about three miles from Constellation Energy Group's Calvert Cliffs nuclear plant - have been less eager about the LGN plant's revival.
Some said it would ruin one of the best fishing spots on the bay. Others worried that a spill would create a vapor cloud that would cause a horrific explosion if ignited. Still others expressed concern that the terminal could become another target for terrorists.
"A few years ago, they started talking about reopening the terminal," said James Oneyear, 64, a retired electrician who has lived in Cove Point since 1966. "There were a lot of people who were really disturbed about it. I went to all three of the meetings that they had and they just told us they were going to do it whether we wanted them to do it or not."
Others in the area said they have come to accept it.
"When you live on the bay, you also live with all the things that could happen ... floods, tornadoes, Calvert Cliffs Nuclear Plant," said Barbara Moyers, 64, a Rockville resident who has lived part time in Southern Maryland since the 1970s. "This is just another thing to add to the list. If you were in bed worrying about all the things that could transpire, you'd have to shoot yourself."
To be inspected
Company officials point out that federal regulators must approve the plant's facilities before the first ship arrives.
Once it is operational, the terminal will be monitored by a number of agencies. The Federal Energy Regulatory Commission, which approved the reopening, will continue to inspect the site once a month. Cove Point's underground pipelines will be regulated by the federal Office of Pipeline Safety and its underwater pipes and pier monitored by the Coast Guard.
Analysts say Dominion's move, at a time when LNG imports account for 1 percent of the nation's natural gas consumption, is astute. The federal Energy Information Administration expects LNG to reach 3 percent of consumption by 2020.
"Dominion is one of the largest companies in the nation," said Shelby Tucker, an analyst with Banc of America Securities. "They do exploration of oil and gas, so they have a sense of overall demand and supply in the country. They're smart people. Acquiring Cove Point was the right move at the right time."
By the time Cove Point is fully operational, which is expected to be in August, the plant will be able to store 5 billion cubic feet of LNG, chilled to 260 below zero to convert it to liquid. Cove Point can pump out enough energy a day through three pipelines to run about 3.4 million homes.
A single ship can carry enough LNG to meet the daily energy needs of more than 10 million homes. Dominion is expecting about 60 ships a year bearing fuel from places that include Nigeria, Trinidad and Tobago, Algeria, Venezuela and Norway.
