Economy
Matt Houston / AP

Reversing the flow: With Cove Point, U.S. seeks to become a gas exporter

As the US moves toward sending fracked natural gas overseas, environmental and economic questions hang in the balance

CALVERT COUNTY, Md. — Mickey Shymansky is not the kind of guy who usually gives politicians what for. But on Tuesday, April 29, he approached the microphone at a government meeting in Prince Frederick, Maryland, and introduced himself: a captain in the District of Columbia Fire Department just 45 miles up the road, with a bachelor’s degree in fire science and 30 years of experience. His black tie had a red fire truck on it — the white ladder reached almost to the knot.

“Mrs. Shaw,” he said to one of the five county commissioners before him, “I know that you have a son with the Washington, D.C., fire department. And I’m sure you love the fact that he comes home safely at the end of a shift."

Four weeks earlier, an explosion at a liquefied natural gas (LNG) plant in Plymouth, Washington, had punctured a storage tank, forcing an evacuation in a 2-mile radius. From the front steps of the southern Calvert County home where 46-year-old Shymansky lives with his wife, Jennifer, and four children, he can see one of seven LNG storage tanks owned by Virginia-based Dominion Resources. The plant, on the coast of the Chesapeake Bay, was built to import LNG. Now Dominion wants to begin exporting LNG, and the commissioners support the company’s plans to build a power plant and other infrastructure to purify natural gas, cool it to the 260 degrees below zero needed to liquefy it, and ship it overseas.

Shymansky opposes the expansion. He described terrifying scenarios that he says an explosion at the plant could create — homes destroyed, residents suffocating to death. “I would be devastated,” he concluded, “if my family dies during a gas incident while I’m at work protecting the nation’s capital.”

The LNG plant Shymansky is protesting may be just several hundred yards from his home, but the forces that drew him to a small-town county commissioners’ meeting extend halfway across the globe. The United States, long an importer of natural gas, could become one of the world’s largest exporters.

Greenhouse gas polluter

 Imports to Dominion’s Cove Point LNG plant dropped 90 percent in the past seven years as advances in hydraulic fracturing, known as fracking, boosted domestic production of natural gas.  Dominion received conditional approval from the U.S. Department of Energy last September to start exporting LNG , and the company has already inked contracts in Japan and India, where importers are willing to pay three to four times more than Americans for natural gas.   (The Department of Energy must approve facilities hoping to export to countries, like Japan and India , that lack free-trade agreements, or FTAs, with the U.S. )  Federal regulators have received 31 applications from companies hoping to export natural gas to non-FTA countries.  One site in Louisiana has gone through all the hoops and has begun construction ; it expects to begin exporting in two or three years.  Six others, including Cove Point, which have received “conditional” approval, just need an environmental review and a green light from the U.S. Department of Energy before building.  The LNG export train, it would seem, is pulling out of the station. Mickey Shymansky’s concerns about safety are not the only issue that could derail it; Cove Point in particular has attracted national attention. The Sierra Club and 13 other environmental advocacy groups wrote a letter to President Obama in March, urging a more thorough environmental review.  Chesapeake Climate Action Network founder Mike Tidwell says exports from Cove Point would create more demand for natural gas from the Marcellus Shale formation — a hotbed for fracking underneath West Virginia and several other nearby states — and immediately make the site Maryland’s biggest greenhouse gas polluter. “You have to pipe it, compress it, send it all the way from wherever,” Tidwell says. “Then in Cove Point they have to build a full-scale power plant to liquefy the gas, then tankers burn fossil fuels as they transport it all the way to Asia, then it’s regassed, and it’s lit on fire for energy use for downtown Tokyo and New Delhi.”   Critics say LNG exports would result in more fracking to meet the extra demand, leading to more leaks of methane — a powerful greenhouse gas  — and potentially polluting the air and drinking water of residents near drilling sites.  (Dominion’s website notes that the company doesn’t control the source of the gas they hope to export; it could be piped in, they say, “from virtually anywhere in the United States,” fracked or not. ) A peer-reviewed study released in April found that protocols currently in place to monitor fracking wells “are inadequate to ensure safety,”  and the state of Maryland itself won’t decide whether to allow fracking until a commission created by Governor Martin O’Malley releases its findings in August.   But Cove Point isn’t a simple game of chicken between the environment and the economy. Exporting LNG could drive up the price of natural gas in the U.S. Labor unions, as well as manufacturing and gas distribution groups, have lined up on both sides of the Cove Point debate — depending on whether they think there’s enough natural gas here to meet demand both at home and abroad without increasing prices for U.S. consumers.   Supporters of LNG exports point out its potential to reduce America’s trade deficit,  and lawmakers are beginning to weigh in. On April 30, a bill that would force the U.S. Department of Energy to make quicker decisions on LNG export applications passed the House Energy and Commerce committee with yeas from five out of 24 Democrats, which could arguably pass for bipartisan these days.    (A Republican amendment to fast-track LNG exports helped bring down a Senate energy efficiency bill on Monday.)   President Obama has not explicitly weighed in on Cove Point, and there has been little word from the White House on LNG exports in general. (Deputy National Security Adviser Ben Rhodes told reporters in late March that the White House was “willing already to move towards additional licenses for export of natural gas.”)  Domestically, the Obama administration’s “all of the above” energy policy has a goal of generating 80 percent of electricity from “clean energy” by 2035; “clean” includes both natural gas and nuclear power.
For years, Cove Point imported LNG. Now it wants to build a facility to cool gas from the United States and ship it overseas.
Matt Houston / AP

Imports to Dominion’s Cove Point LNG plant have dropped 90 percent in the past seven years as advances in hydraulic fracturing, known as fracking, have boosted domestic production of natural gas. Dominion received conditional approval from the U.S. Department of Energy (DOE) last September to start exporting LNG, and the company has already inked contracts in Japan and India, where importers are willing to pay three to four times more than Americans for natural gas. (The DOE must approve facilities hoping to export to these and other countries that lack free-trade agreements, or FTAs, with the United States.)

Federal regulators have received 31 applications from companies hoping to export natural gas to non-FTA countries. One site in Louisiana has gone through all the hoops and has begun construction; it expects to begin exporting in two or three years. Six others, including Cove Point, which have received “conditional” approval, just need an environmental review and a green light from the DOE before building.

The LNG export train, it would seem, is pulling out of the station. Mickey Shymansky’s concern about safety isn't the only issue that could derail it; Cove Point in particular has attracted national attention. The Sierra Club and 13 other environmental advocacy groups wrote a letter to President Obama in March, urging a more thorough environmental review.

Chesapeake Climate Action Network founder Mike Tidwell says exports from Cove Point would create more demand for natural gas from the Marcellus Shale formation — a hotbed for fracking underneath West Virginia and several other nearby states — and immediately make the site Maryland’s biggest greenhouse gas polluter. “You have to pipe it, compress it, send it all the way from wherever,” Tidwell says. “Then in Cove Point they have to build a full-scale power plant to liquefy the gas, then tankers burn fossil fuels as they transport it all the way to Asia, then it’s regassed, and it’s lit on fire for energy use for downtown Tokyo and New Delhi.”

Critics say LNG exports would result in more fracking to meet the extra demand, leading to more leaks of methane — a powerful greenhouse gas — and potentially polluting the air and drinking water of residents near drilling sites. (Dominion’s website notes that the company doesn’t control the source of the gas they hope to export; it could be piped in, they say, “from virtually anywhere in the United States,” fracked or not.) A peer-reviewed study released in April found that protocols currently in place to monitor fracking wells “are inadequate to ensure safety,” and the state of Maryland itself won’t decide whether to allow fracking until a commission created by Gov. Martin O’Malley releases its findings in August.

Reducing the trade deficit

But Cove Point isn’t a simple game of chicken between the environment and the economy. Exporting LNG could drive up the price of natural gas in the United States. Labor unions, as well as manufacturing and gas distribution groups, have lined up on both sides of the Cove Point debate — depending on whether or not they think there’s enough natural gas here to meet demand both at home and abroad without increasing prices for U.S. consumers.

Supporters of LNG exports point out its potential to reduce America’s trade deficit, and lawmakers are beginning to weigh in. On April 30, a bill that would force the DOE to make quicker decisions on LNG export applications passed the House Energy and Commerce committee with yeas from five out of 24 Democrats, which could arguably pass for bipartisan these days. (A Republican amendment to fast-track LNG exports helped bring down a Senate energy efficiency bill on Monday.)

President Obama has not explicitly weighed in on Cove Point, and there has been little word from the White House on LNG exports in general. (Deputy National Security Adviser Ben Rhodes told reporters in late March that the White House was “willing already to move towards additional licenses for export of natural gas.”) Domestically, the Obama administration’s “all of the above” energy policy has a goal of generating 80 percent of electricity from “clean energy” by 2035; “clean” includes both natural gas and nuclear power.

But Cove Point isn’t a simple game of chicken between the environment and the economy. Exporting LNG could drive up the price of natural gas in the U.S. Labor unions, as well as manufacturing and gas distribution groups, have lined up on both sides of the Cove Point debate — depending on whether they think there’s enough natural gas here to meet demand both at home and abroad without increasing prices for U.S. consumers.

Supporters of LNG exports point out its potential to reduce America’s trade deficit, and lawmakers are beginning to weigh in. On April 30, a bill that would force the U.S. Department of Energy to make quicker decisions on LNG export applications passed the House Energy and Commerce committee with yeas from five out of 24 Democrats, which could arguably pass for bipartisan these days. (A Republican amendment to fast-track LNG exports helped bring down a Senate energy efficiency bill on Monday.)

President Obama has not explicitly weighed in on Cove Point, and there has been little word from the White House on LNG exports in general. (Deputy National Security Adviser Ben Rhodes told reporters in late March that the White House was “willing already to move towards additional licenses for export of natural gas.”) Domestically, the Obama administration’s “all of the above” energy policy has a goal of generating 80 percent of electricity from “clean energy” by 2035; “clean” includes both natural gas and nuclear power.

But Cove Point isn’t a simple game of chicken between the environment and the economy. Exporting LNG could drive up the price of natural gas in the U.S. Labor unions, as well as manufacturing and gas distribution groups, have lined up on both sides of the Cove Point debate — depending on whether they think there’s enough natural gas here to meet demand both at home and abroad without increasing prices for U.S. consumers.

Supporters of LNG exports point out its potential to reduce America’s trade deficit, and lawmakers are beginning to weigh in. On April 30, a bill that would force the U.S. Department of Energy to make quicker decisions on LNG export applications passed the House Energy and Commerce committee with yeas from five out of 24 Democrats, which could arguably pass for bipartisan these days. (A Republican amendment to fast-track LNG exports helped bring down a Senate energy efficiency bill on Monday.)

President Obama has not explicitly weighed in on Cove Point, and there has been little word from the White House on LNG exports in general. (Deputy National Security Adviser Ben Rhodes told reporters in late March that the White House was “willing already to move towards additional licenses for export of natural gas.”) Domestically, the Obama administration’s “all of the above” energy policy has a goal of generating 80 percent of electricity from “clean energy” by 2035; “clean” includes both natural gas and nuclear power.

It’s an influx of cash without a lot of growth. You’d have to put up 300 shopping centers to generate that kind of revenue.

Andrew Brown

Resident of Calvert County, Maryland

That “all of the above” policy is well represented in Calvert County. Just 6 miles north of Cove Point is a two-reactor nuclear power plant. Before the first reactor opened in 1975, Calvert County was known for tobacco farming and for the watermen who made their living along the county’s 143 miles of Chesapeake Bay and Patuxent River shoreline. According to the county’s economic development director, Linda Vassallo, Calvert was then one of the poorest counties in Maryland. By 1979, when the second reactor and an LNG import pier had opened, the two plants accounted for an estimated 70 percent of county revenue. “In the 1970s and early ’80s, Calvert Cliffs Nuclear Power Plant played a significant role in the county’s growth,” Vassallo says in an email.  

The LNG and nuclear power plants together provide more than 1,000 jobs and are the two biggest property tax payers in Calvert County. The proposed export terminal at Cove Point alone is expected to create 75 permanent jobs and 3,000 temporary construction jobs. The county’s economic development office has lavished praise upon the owners of the power plant (an “excellent corporate citizen”) and the LNG terminal (“we … trust their commitment to safety and environmental stewardship”). The only business tax credits the county has ever offered were to Dominion Resources and Constellation Energy, which owns the power plant.

Some county residents, like 62-year-old business owner Andrew Brown, are pushing for approval of exports at Cove Point. “We are in the blast zone,” says Brown, a 38-year resident of Calvert County who lives just over a mile from the plant. Nonetheless, his wife, Kris, wrote to the Federal Energy Regulatory Commission in favor of the project, and he supports it, too. “It’s an influx of cash without a lot of growth,” he says of the extra taxes that exports at Cove Point would generate. “You’d have to put up 300 shopping centers to generate that kind of revenue.”

Environmental review

Mickey Shymansky, however, has plenty of company in Calvert County in his opposition to the expansion. Local homeowners and environmentalists have held meetings and raised questions about environmental effects and public safety, including the preparedness of emergency responders. (Dominion declined an interview request, citing “scheduling constraints as we prepare to receive two significant permits.” Calvert County officials did not comment, instead sending a link to a letter to a local newspaper written by the chief of a local fire department praising Dominion’s cooperation on training and equipment related to Cove Point.)

Tamara Young-Allen, a spokesperson for the Federal Energy Regulatory Commission, says the agency hopes to release an environmental assessment of the planned Cove Point liquefaction facility by May 15. Opponents of the project say that’s insufficient and are pressing for a full environmental impact statement. The Calvert County Board of Commissioners wrote to FERC in March claiming a more rigorous evaluation was unnecessary, calling the environmental issues “relatively small in number and well-defined.”

Another important decision, from Maryland’s Public Service Commission, is expected by May 30. The PSC has the power to hold up construction of a power plant at the Cove Point site that would be needed to create the extremely cold temperatures that liquefy the gas. The same stakeholders filing letters with FERC have been writing to the PSC as well.

If the PSC approves the power plant and the U.S. Department of Energy gives final approval for exports, Cove Point may start exporting as much 281 billion cubic feet of LNG a year — for 20 years. The Energy Department will then continue moving through its list of export applications, deciding how much of America’s domestic supply of natural gas will go overseas.

Is that supply plentiful enough to chip away at the trade deficit and also keep fueling cheap consumption at home? Soon enough, Mickey Shymansky and others watching the Cove Point case will see some of the safety and environmental trade-offs that local, state and federal policymakers are willing to make to find out.

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