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Dominion Energy’s Cove Point LNG export facility begins commercial operations

The Dominion Energy Cove Point liquefied natural gas (LNG) facility in Maryland exported its first LNG cargo during its final stage of commissioning, on Royal Dutch Shell Plc’s LNG carrier, Gemmata, with a capacity of 3.0 billion cubic feet (Bcf). Its destination and buyer are unknown. The Federal Energy Regulatory Committee (FERC) granted approval for Cove Point to officially begin commercial operations on March 5. The Methane Spirit will likely be the next vessel to export Cove Point LNG at the end of March.

Cove Point has a design capacity to liquefy up to 0.75 billion cubic feet per day (Bcf/d) of natural gas. The natural gas is sourced from the high-producing Marcellus and Utica shale plays. Cove Point is the only LNG export facility on the east coast of the United States and the second export facility operating in the Lower 48 states after Sabine Pass in Louisiana, which began commercial operations in 2016.

Cove Point began receiving natural gas feedstock deliveries for LNG production in early December 2017. Two LNG cargoes were imported into Cove Point in December 2017 and January 2018 as cool down cargoes, which is the standard practice for preparing and testing liquefaction equipment systems for LNG production. According to S&P Global Platts Bentek Energy, the implied pipeline feedgas deliveries to the Cove Point terminal averaged 0.25 Bcf/d in February and increased to 0.45 Bcf/d in the two weeks leading up to the export. On the day of export, the pipeline deliveries decreased from a high of 920 million cubic feet per day (MMcf/d) to 18 MMcf/d.

The U.S. Department of Energy’s Office of Fossil Energy approved Cove Point to export up to 0.77 Bcf/d to non-Free Trade Agreement (FTA) countries. Cove Point liquefaction output is fully subscribed under 20-year service agreements. Half of the marketed capacity will go to a joint venture of Sumitomo Corporation and Tokyo Gas and the other half to India’s state-owned GAIL (India) Ltd. LNG contracted by Japanese buyers will likely be used for power generation in the Tokyo and Kansai metropolitan areas. GAIL is seeking to resell 24 of its Cove Point cargos in tranches of 6 to 12 in 2019 and 2020, which is approximately 40% of its subscribed volume over this time period, assuming average-sized cargos.

EIA’s Short Term Energy Outlook projects that LNG exports will average 2.9 Bcf/d in 2018, up 1 Bcf/d from 2017 levels. By 2019, LNG exports are expected to average 4.8 Bcf/d as new liquefaction capacity comes online.

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-Adrienne Blume
The US East Coast will send out its first LNG exports in early 2018 as Dominion Energy’s Cove Point LNG export facility in Lusby, Maryland becomes operational.

The New LNG Imperative

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The shale gas boom established the US as the world’s leading natural gas producer and is responsible for billions of dollars of investments in the US gas processing industry. Since 2012, the US has witnessed unprecedented growth in new gas processing capacity and infrastructure. This rise is due to greater production of domestic shale gas, which is providing cheap, available feedstock to fuel the domestic gas processing, LNG and petrochemical industries. New gas processing projects include the construction of billions of cubic feet per day of new cryogenic and gas processing capacity, NGL fractionators, multi-billion-dollar pipeline infrastructure projects, and the development of millions of tons per year of new LNG export terminal construction. Attend this webcast to hear from Lee Nichols, Editor/Associate Publisher, Hydrocarbon Processing, Scott Allgood, Director-Data Services, Energy Web Atlas and Peregrine Bush, Senior Cartographic Editor, Petroleum Economist as they discuss the future of LNG and the application of Energy Web Atlas, a web-based GIS platform which allows users to track real-time information for every LNG project.

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