PITTSBURGH—In just a few short years, Dominion Energy Inc. (D) will become an exporter of LNG when its Chesapeake Bay area shipping terminal at Cove Point commences operations. Opened in 1978, Cove Point LNG terminal received shipments of LNG from Algeria for two years until it was idled in 1980, a status that did not change for more than ten years. In 1994 it was reactivated to provide peaking storage, and in 2002 the terminal was purchased by Dominion Energy from Williams for $217 million, according to the company. Dominion Cove Point received its first LNG shipment in the summer of 2003.

Today, the Maryland terminal is undergoing a transformation from an LNG import-only terminal with the construction of new LNG export facilities to create a bi-directional terminal. The transformation was made necessary due to the rich resources of the mighty Marcellus and unstoppable Utica shales that vaulted the Appalachian basin onto the global stage.

Michael Frederick, Dominion Energy’s vice president of LNG Operations, provided attendees at the Hart Energy’s DUG East conference and exhibition in June a construction update on the company’s Cove Point LNG terminal and its plans for exporting the Appalachian gas bounty.

“At Cove Point currently, we have 1.8 Bcf of natural gas send-out with 14.6 Bcf of LNG storage,” Frederick said. “Our project is about 750 MMcf/d for export, with a project cost between $3.4 billion to $3.8 billion with financing policies. We began marketing it in the spring of 2011 worldwide, with the most interest from Asia. Ultimately, we secured two terminal service agreements.”

In April 2013, Dominion signed a 20-year terminal service agreement with the U.S. affiliates of the Sumitomo Corp. and another with GAIL (India) Ltd. Through Sumitomo, there are off-take agreements in place with Tokyo Gas Co. and Kansai Electric Power Co.

Construction of the new export facilities began in October 2014 after the Federal Energy Regulatory Commission granted its authorization to build.

“For our project we already had the storage capacity we needed. We planned to use the two existing 36-in. pipelines coming in to the facility,” he said. “The project consists of three major components: offsite area B, offsite area A, and the terminal itself. The offshore pier can accept the largest LNG vessels on the water, and it’s capable of docking two vessels at one time.”

Frederick answered some of the questions that he’s received regarding the project, like will Cove Point be export-only once the project is finished?

“The answer is no. We have import contracts that start rolling off in 2017. That’s the portion we’re actually using to do the export project,” he said. “The balance of those import projects exists till 2023, so we’ll truly be a bidirectional facility.”

Another common question is does the company really think the facility will be operational as planned in 2017?

“We are well under construction and advancing rapidly,” he said. “We’ve said we anticipate in-service in 2017. Do we really believe that? Yes we do. We put the schedule together to accomplish that. We got a little later start than we wanted but we’ve also made some changes in how we’re doing the work. We fully expect to be operational in late 2017.”

Contact the author, Jennifer Presley, at jpresley@hartenergy.com.