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Dominion Cove Point LNG United States
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Created before Nov 2016
Last update: 2016-11-01 00:00:00

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Dominion Cove LNG project. Photo: Pacificsummitenergy.com
Sector LNG Terminal
Location
Status
Planning
Design
Agreement
Construction
Operation
Closure
Decommission
Website https://www.dom.com/covepoint
This project has been identified as an Equator Project

About Dominion Cove Point LNG

Dominion is constructing liquefaction facilities for exporting liquefied natural gas (LNG) at its existing Cove Point Terminal on the Chesapeake Bay in Maryland. The proposed liquefaction facilities, combined with existing facilities, will provide a bi-directional service of import and export of LNG at the Dominion Cove Point LNG Terminal. The project requires an investment of USD 3.8 billion.

Latest developments

Dominion Cove LNG project expected to be completed in 2017

2017-03-13 00:00:00

IPO Closes

2014-10-20 00:00:00

What must happen

Potential investors and banks should avoid participation in DM's IPO sale. There are serious environmental, corporate governance and permitting delay risk associated with the sole asset of DM, the Cove Point LNG export terminal.  

Impacts

Social and human rights impacts

More dangerous fracking If the Cove Point export facility is approved, it will provide a strong economic incentive for companies to expand fracking across our region, including in Maryland, where no drilling yet occurs. In other states, the expansion of fracking has caused drinking water contamination, air pollution, illnesses and even earthquakes.

Risking the Chesapeake Bay economy and ecology The Chesapeake Bay supports more than a trillion dollars in economic activity through seafood and tourism. Exporting gas from Cove Point would increase traffic of massive, 1,000-foot long tankers carrying volatile, potentially explosive liquid fuel. Harmful emissions from those tankers would worsen local air quality. They would also dump billions of gallons of dirty ballast wastewater into the Bay each year. Construction of the gas liquefaction facility would require the clearing of forests and barging in of heavy construction materials along the Patuxent River, further threatening the network of rivers, wetlands and forests that attract tourists and support rare species of plants, animals and migratory birds.

A web of destructive fossil fuel architecture To support the export of LNG on the East Coast, new pipelines will be needed throughout the Marcellus shale states to get gas from new drilling wells to the export terminal. Pipelines, which inevitably leak and rupture causing dangerous explosions and fires, would snake through our waterways, backyards and farms. Noisy, polluting compressor stations could be required from Fairfax, Virginia to Frederick, Maryland and everywhere in between to keep gas moving through pipelines. Residents of the small, rural town of Myersville, Maryland are already fighting a 16,000-horsepower compressor station that Dominion wants to construct, which would be located just a mile from their elementary school.

Making natural gas more expensive at home If all the proposed LNG export projects in the U.S. are approved, the result would be the export of more than 40 percent of our current production of natural gas. This means more competition at home, and thus, higher prices for domestic consumers and industries.

According to the NERA Economic Consulting Analysis commissioned by the U.S. Department of Energy, exporting natural gas harms every major sector of the U.S. economy, except the gas industry. In the graphic above, negative numbers represent economic loss, positive numbers equal economic gain.

Environmental and climate impacts

Consequences for climate change Looking at the big picture impacts of fracking, the International Energy Agency concludes that a worldwide reliance on fracked gas would lead to six degrees Fahrenheit of atmospheric warming, in other words, cooking the planet. LNG exports are even more energy intensive than gas drilled and burned at home. After the gas is transported, liquefied for export and then re-gasified to burn, the lifecycle emissions of exported LNG are 15 percent higher than gas consumed domestically. 

To power liquefying and cooling operations, Cove Point would require construction of a new gas plant on-site that would be Maryland's fourth-largest climate polluter. From start to finish of the LNG export process, Cove Point would trigger more planet-heating pollution than Maryland's entire fleet of seven coal-fired power plants combined.

If we're going to preserve a safe climate, we can't open the floodgates to fracked gas exports on the East Coast-just like we can't build the Keystone XL tar sands oil pipeline to the Gulf Coast or new coal export terminals on the West Coast. We can and must invest instead in clean energy, making our region a leader in offshore wind power, new solar installations and energy efficiency, technologies that will create jobs and grow our economy permanently and safely.

The new liquefaction facility that Dominion would have to build on-site to process gas for export would emit more heat-trapping carbon dioxide than all but three of the state's existing coal plants. In all, given the energy-intensive process of extracting, transporting and processing gas for export, Cove Point would trigger more greenhouse gas emissions than any other single source of climate pollution in Maryland.

Other impacts

Financial aspects

  • Dominion Midstream is undiversified: Cove Point is its sole cash generating asset;
  • Cove Point's largest customer represents approximately 72% of the total transportation and storage revenues, and for the Liquefaction Project there are contracts with only two customers;
  • The trend in federal environmental regulations could have a material adverse effect on Cove Point's operations and financial position;
  • The location of Cove Point is vulnerable to climate threats;
  • Unless the Liquefaction Project is completed, Cove Point is not expected to generate sufficient cash flows to pay distributions to Dominion Midstream in full, which makes it unlikely for Dominion Midstream to make payments to its unitholders;
  • Unitholders have limited voting power and are last in line to receive cash distributions;
  • There are no obligations to make cash distributions to unitholders;
  • Also without cash distribution, tax payment by unitholders on their share of Dominion Midstream's taxable income is required;
  • Dominion Resources will be the ultimate owner of the general partner of Dominion Midstream and will provide all of the necessary funding. No agreement requires Dominion Resources to pursue a business strategy that favours Dominion Midstream and its common unitholders. This constitutes a clear conflict of interest;
  • Barclays, Citigroup and JP Morgan Chase are exposed as a lender to Dominion Resources and at the same time are involved in underwriting the IPO. This constitutes a clear conflict of interest.
  • Final permits and governmental approval for the Liquefaction Project have not been received and there is a lot of resistance from multiple angles, making further project delay likely.

Governance

Timeline

Dominion Cove LNG project expected to be completed in 2017

2017-03-13 00:00:00

The massive USD 3.8 billion project aimed at making a Southern Maryland natural gas plant a major player in product export is rolling toward completion, utility officials reported (source The BayNet.com)

IPO Closes

2014-10-20 00:00:00

Dominion Midstream Partners announced the closing of its initial public offering. Barclays, Citigroup, J.P. Morgan, BofA Merrill Lynch, Goldman, Sachs & Co., UBS Investment Bank and Morgan Stanley acted as joint book-running managers for the offering. RBC Capital Markets and Scotiabank / Howard Weil acted as co-managers for the offering. See the company's press release.

Financiers

Barclays Capital (United Kingdom) and the American investment banks Citigroup Global Markets and J.P. Morgan Securities are acting as the underwriters and the joint book-running managers of this offering (Source: Dominion Midstream Partners, "Amendment No. 1 to Form S-1 Registration Statement Under The Securities Act Of 1933", Dominion Midstream Partners, 21 May 2014.) 

Related companies

Dominion Energy United States

Dominion Resources will be the ultimate owner of the general partner of Dominion Midstream and will provide all of the necessary funding.

News

| |
Type:
Year:
blog
external news
our news

Equator Banks fail communities on consultation and grievance mechanisms, new study finds

BankTrack research into nine projects financed ‘under Equator’ finds routine failures to conduct proper community consultation and a lack of effective project-level grievance mechanisms
2020-11-24 | Nijmegen | BankTrack
blog
external news
our news

Equator Principles requirements missing for most projects, finds new BankTrack study

Research into 37 projects financed 'under Equator' finds project-level grievance mechanisms or stakeholder engagement processes cannot be evidenced in 65% of cases
2020-08-11 | BankTrack
blog
external news
our news

In Major Victory for Environment, Maryland Legislature Votes to Ban Fracking

2017-03-28 | Alternet.org
blog
external news
our news

Report Warns Investors: Avoid Dominion’s Cove Point LNG Export Project

Analysis details serious financial, governance and sustainability risks of controversial Dominion Midstream master limited partnership to export fracked gas
2014-09-10 | Washington DC | Chesapeake Climate Action Network
blog
external news
our news

ALL ABOUT UNITY: THANK YOU AND ONWARD FROM THE STOP GAS EXPORTS RALLY

2014-07-15 | Chesapeake Climate Action Network
blog
external news
our news

Dominion Resources Cove Point project inches along

2014-05-13 | Power Source
blog
external news
our news

Maryland LNG Terminal draws fire

2014-05-07 | United Press Internationa
blog
external news
our news

Dominion Confronted With SEC Complaint over Investor Risks in Cove Point LNG Export Plan

2014-05-06 | Southern Maryland News Net
blog
external news
our news

Environmental activists file SEC complaint over Cove Point gas facility

2014-05-06 | Maryland Daily Record
blog
external news
our news

Activists call on US SEC to investigate Dominion's Cove Point claims

http://www.platts.com/latest-news/natural-gas/washington/activists-call-on-us-sec-to-investigate-dominions-21584072
2014-05-06 | Washington | Platts
blog
external news
our news

Plant foes file complaint with SEC

2014-03-06 | The Bay Net

Documents

Type:
Year:
our publications
2020-11-24 00:00:00

"Trust Us, We're Equator Banks": Part II

2020-11-24 00:00:00 | BankTrack
ngo documents
2014-09-10 00:00:00

Dominion Midstream Partners - Profundo Risk Report

Liquefied natural gas holding company - Avoid
2014-09-10 00:00:00 | Profundo
ngo documents
2014-05-06 00:00:00

SEC complaint on Dominion Midstream form S1 registration statement

2014-05-06 00:00:00 | Chesapeake Climate Action Network

Media

Stop Cove Point




Links

Stop Cove Point

Chesapeake Climate Action Network page on Cove Point
http://www.stopcovepoint.org

Brief history

The Delaware (U.S.) based master limited partnership Dominion Midstream Partners (Dominion Midstream) is planning to make an Initial Public Offering (IPO) on the New York Stock Exchange under the symbol "DM". Dominion Midstream has filed a Registration Statement on Form S-1 with the U.S. Securities and Exchange Commission (SEC) relating to its proposed IPO of common units representing limited partner interests on March 28, 2014. On May 21, 2014, Dominion Midstream filed an amendment to the initial filing.

The date of the issuance, the number of common units to be offered and the price range for the offering have not been determined, but Dominion Midstream aims to raise approximately USD 400 million with the IPO. Barclays Capital (United Kingdom) and the American investment banks Citigroup Global Markets and J.P. Morgan Securities are acting as the underwriters and the joint book-running managers of this offering.

Dominion Midstream is a growth-oriented limited partnership formed on March 11, 2014 by Dominion Resources to initially own all of the outstanding preferred equity interests in Dominion Cove Point LNG (Cove Point), a Delaware limited partnership, which owns liquefied natural gas (LNG) import, storage, regasification and transportation assets. Cove Point is located on the Chesapeake Bay in Lusby, Maryland.

Dominion Midstream intends to use the estimated net proceeds of the IPO to make a contribution to Cove Point in exchange for a portion of the preferred equity interest. Dominion Midstream intends to cause Cove Point to use the net proceeds contributed to it in connection with this offering to fund a portion of the development and construction costs associated with its planned new project called "Dominion Cove Point LNG liquefaction project" (Liquefaction Project). This project will enable the facility to liquefy domestically-produced natural gas delivered by customers from virtually anywhere in the United States (although most of it will likely come from the Marcellus shale play) and export it as LNG to foreign countries (in this case Japan and India). The projects will cost between approximately USD 3.4 billion and USD 3.8 billion, exclusive of financing costs. The permitting and other legal preparations for this project started in October 2011 and are still ongoing (source: Profundo report).

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