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An energy dilemma at Md.’s Cove Point

“It’s been the slowest year I’ve had,” says Scott Adams, as he watches lunch customers trickle into the Frying Pan, the restaurant he has owned for 23 years near Lusby in Southern Maryland. The rustic eatery on Route 765 is just a few miles from Dominion Cove Point, a massive yet stagnant facility built in the 1970s to import liquefied natural gas (LNG).

But dramatic change is on the menu at the Frying Pan and at Cove Point. The plan is to get things moving by reversing the flow of gas. Richmond-based Dominion Transmission wants to invest $3.8 billion — one of the largest corporate investments in Maryland history — and start exporting the gas, suddenly so plentiful in the United States thanks to the advent of revolutionary hydraulic fracking and horizontal drilling methods.

Now, among 16 such proposals around the country, Dominion Transmission stands third on the regulatory approval list, according to company spokesman Daniel E. Donovan. The utility says the project will create about 4,000 construction jobs and 180 permanent ones at the facility, which now employs 98.

In the short run, it’s hard to dispute the logic here. Exporting gas represents a fundamental shift in the United States’ global energy equation. It would reduce U.S. dependence upon foreign energy and help rebalance a badly out-of-whack trade ledger. When measured against the status quo, it would also help the environment. Natural gas emits about half as much climate-changing carbon dioxide as does coal; miners don’t die and Appalachian mountaintops aren’t destroyed to produce it; and its use doesn’t generate radioactive waste requiring thousands of years of storage.

Yet many environmentalists are far from sold. As Josh Tulkin, director of the Maryland chapter of the Sierra Club points out, correctly, natural gas exports will encourage more fracking in states such as Pennsylvania and West Virginia, a practice that remains controversial because of the potential for serious groundwater contamination. There are also difficult-to-quantify problems with methane, a highly potent greenhouse gas, leaking from drilling rigs. Finally, opponents argue that exports could increase the domestic price of gas, perversely slowing the shift away from dirty coal at U.S. power plants. But given the sheer flood of gas that continues to come online, that concern at least seems unfounded.

For the key player — Dominion Transmission — it doesn’t appear to be a difficult call. Exporting from Cove Point is almost a no-lose proposition. Built during the energy-crisis years of the 1970s, Cove Point has had a checkered past. Highly volatile gas prices all but shuttered the facility several times before Dominion Transmission bought it in 2002. It then invested $1 billion in upgrades to allow the facility to handle major importers, but Donovan said that Cove Point nonetheless saw its last commercial LNG tanker in October 2011.

That investment may yet turn out lucky. As fracking lowered domestic prices, Dominion Transmission realized that it had most of an export infrastructure — a tanker terminal, pipes and seven tanks that act like giant Thermos bottles — already in place. All that was needed was the gear to turn vapor gas into a shippable liquid at minus-265 degrees Fahrenheit. Dominion Transmission had no trouble signing 20-year supply contracts with Japan’s Pacific Summit Energy and Indian’s GAIL-Global, which now pay at least four times the U.S. rate for natural gas. With the two contracts, Dominion Transmission has all the revenue it needs for financing. Final approval from the Federal Energy Regulatory Commission and the Energy Department is expected by early next year.

Calvert County will also obviously benefit as well. Watery and scenic, it is home to retirees and commuters. Thousands of military service members and civilians work at Patuxent River Naval Air Station, where watching the skies for pilotless drone aircraft is a popular activity. The utility says that county business sales will be boosted by $2.6 billion during the construction and operation of the facility. Calvert will also get $16 million and Maryland will receive $59 million in income and sales taxes over the life of the project, Dominion says.

Safety is another issue that can’t be ignored. Under the right circumstances, LNG plants and ships can be catastrophically explosive and could be a terrorist bull’s-eye, which explains the tight security at the plant. But there’s been only one death associated with natural gas at Cove Point. In 1979, a worker was killed when gas leaked inside a building and exploded; that incident led to a national upgrade of electrical safety standards. The export project will involve building pipeline compression stations in Fairfax and Loudoun counties; Dominion has already run into local opposition over safety regarding similar projects it proposed earlier in Myersville west of Frederick.

The biggest issues are longer-term, argues Tulkin, and it’s at this point that Dominion Transmission’s plan begins to weaken. Maryland has set a goal of having 20 percent of its electricity come from renewables by 2020 — that’s just seven years away — and right now only 7 percent does. The Maryland legislature this year made available up to $1.7 billion for offshore wind development, but nothing has been built yet. Does it make sense to pour additional billions into the fossil-fuel infrastructure? “We are still dealing with coal-fired electrical plants that were built 50 years ago,” Tulkin says. “We need to start thinking about where we need to be in 50 years.”

Tulkin has a point — but not quite enough of one to convince me that the project shouldn’t go forward. In the short term, the Cove Point project will benefit the region economically and make money for Dominion Transmission. But natural gas is nonrenewable and, though it’s better than coal, it still pollutes. As the climate forecast continues to darken, natural gas can help stop the bleeding, but no one should imagine it is any sort of cure. It does not represent the long-term future of energy for Maryland or anywhere else.

The writer blogs at Bacon’s Rebellion and is a participant in The Post’s Local Blog Network.

 
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