Dominion Resources’ Cove Point offshore liquid natural gas (LNG) shipping terminal, located on the western Chesapeake coast of Maryland, is currently in the process of commissioning its new export facility. Once it is fully operational, the average draw on the Dominion Cove Point Pipeline (DCPL), the sole pipeline for supply, is expected to be around 750 MMcf/d, or .75 Bcf/d.
Cove Point is now lagging behind Dominion’s Q3 earnings call expectations to have generated the first LNG in November 2017. This has raised some questions about potential constraints that may be affecting the ability of the facility to access gas needed in order to liquefy.
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Genscape does not believe that there will be a significant constraint on DCPL, which was originally built to carry LNG imports into the northeast via interconnects with Transco, Dominion, and Columbia Gas (TCO). The posted Operational Capacity of the four main receipt points (Transco Pleasant Valley Dominion Loudoun, Columbia Loudoun, and CVP Storage) reached highs this year of approximately 860 MMcf/d. It is well above the current demand load on the pipeline, which has averaged near 400 MMcf/d year-to-date.
When Cove Point LNG comes fully online and brings on the extra capacity associated with its improvements to the Pleasant Valley Compressor Station (which is mechanically complete and waiting on Cove Point LNG to request FERC authorization to place it in-service), Genscape expects to see an increase in the overall capacity of DCPL of at least 200 MMcf/d. The project reserved 660 MMcf/d of existing capacity on DCPL and cited that the total project-contracted amount of 860 MMcf/d. Of this overall capacity amount, 430 MMcf/d is reserved by Sumitomo from the Transco Pleasant Valley interconnect, and 420 MMcf/d is reserved by GAIL India via the Dominion Loudoun, Columbia Loudoun, and Transco Pleasant Valley points (180, 180, and 60 MMcf/d respectively). The leftover 10 MMcf/d of the planned capacity is not reserved.
Based on the reserved capacity contracts, Genscape expects Transco Pleasant Valley to receive approximately 490 MMcf/d in total from Transco. Dominion and TCO are expected to contribute 180 MMcf/d each in support of full liquefaction operations at Cove Point. This is well within established capacities for both the Dominion and TCO points, and will not be a problem for the Transco point, which is receiving a major upgrade due to the nearby 63,000 horsepower uprate at the Pleasant Valley Compressor Station.
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The usual draw of power plants and citygates on the system should be easily supplied via these points in addition to the new shippers, as the receipt capacity of the Loudoun meters will be increasing by about 300 MMcf/d from current levels. This allows up to 720 MMcf/d to be received from a combination of Dominion and TCO. While Genscape does not know the new capacity of the Transco interconnect, Dominion hints that it will be north of 850 MMcf/d in their project certificate (“Dominion states that it can also meet its firm transportation obligations if the Export Customers designate all of their gas for receipt at Pleasant Valley”; page 7). Thus, Genscape does not consider the receipt points onto DCPL to be constrained once the full project enters service.
Upstream of DCPL, all three source systems are well able to contribute gas to Cove Point LNG exports. Transco, besides being a well-established south-to-north pipeline, gained firm southbound transportation capacity in late 2015 with the Leidy Southeast project, and again increased capacity through Compressor 195 with the partial service of the Atlantic Sunrise project late this year. Transco could easily supply all 850 MMcf/d of the contracted capacity for Cove Point LNG. Depending on regional demand, the gas could be sourced from either the north via recent projects or the south parts of the pipeline along traditional paths. Dominion is also well positioned to supply Cove Point LNG, with north-south capacity of at least 700 MMcf/d on the segment connecting the main system to DCPL.
TCO’s supply capacity can be considered more mysterious, though it should be able to achieve at least 300 MMcf/d (as it has previously received that amount, and the connecting pipeline appears to be a 36" and 16" loop), and the WB XPress project should increase this capacity by at least 500 MMcf/d when it comes online in estimated late 2018. However, TCO Loudon’s capacity may be improved sooner as Columbia noted on November 16, 2017, when they filed a notification with FERC stating that they would be making some non-WB Xpress-related adjustments to the metering at the Loudoun Compressor Station under their blanket certificate. These adjustments are likely the cause of the recently reported increase of operational capacity on the Columbia Loudoun LNG point from 310 MMcf/d to 900 MMcf/d on December 1, 2017. However, Genscape has not yet seen an uprate of volumes or an update of the point’s operational capacity on the DCPL side of the interconnect, suggesting that the upgraded capacity may not yet be completely available.
Based on the availability of gas on the three supply pipelines and the completed expansion of the Pleasant Valley Compressor Station (which allows just one point to supply the project’s entire contracted capacity), Genscape does not believe that constraints upstream of the facility will affect the date of first liquefaction at the Cove Point LNG Export Terminal.
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