Inside the heavily guarded gate, beyond a barbed wire fence and tall light poles, workers in white hard hats and yellow rain slickers move around a compound of low-lying buildings and gigantic cylindrical tanks.
The scent offers a veneer of activity to visitors to a plant whose control room has been described as looking like something out of Star Trek.
At this isolated site on the rocky western shore of the Chesapeake Bay, 60 miles southeast of Washington, the Comumbia Gas Corp. operates the nation's largest terminal for importing liquefied natural gas (LNG).
But it has been more than 10 months since a tanker unloaded any LNG here.
The supplier, Sonatrach, the Algerian-owned gas and oil monopoly, is demanding a price higher than the sole importer, the El Paso Co., is willing to pay.
The stakes are high in this international stalemate. The two American firms, El Paso and Columbia, have more than $1 billion invested in the terminal and the ships that serve it. But, an El Paso spokesman said last week, "It would be a premature conculsion to call Cove Point a white elephant."
El Paso has been losing $7.5 million a month since the Algerians balked last April 1 on the size of the most recent in a series of price increases. If the impasse continues, El Paso, a Houston-based diversified energy company, is prepared to get out of the LNG business, even though that action could cost it $375 million, or about one-half of its total stockholder equity.
Columbia Gas, which buys the LNG that El Paso imports, also is losing money. It rationed out the LNG in its storage tanks here until they were emptied in December. Since then it has been losing about $93,000 here, according to a spokesman at its headquarters in Wilmington, Del. But Columbia has retained a full work force to protect its three-year-old, $400 million investment here.
A workman interviewed outside the gate here last week said, "don't confuse us with El Paso. All they do is ship the gas here. If they fold, we'll just get someone else to bring it in."
At Columbia's headquarters, the official response to a question about what would happen if El Paso gets out of the LNG business is an oblique "we are looking forward to an early resumption of shipments."
Round six of the negotiations began yesterday in Algiers, between representatives of the U.S. Department of Energy and the Algerian government, DOE entered the picture when it became clear early last year that the Algerians preferred to negotiate on a country-to-country basis.
But because of the change in administrations in Washington, a new set of American representatives is sitting down at the bargaining table this week, and the attitude of the Reagan administration on the subject is still not known.
A new factor in the equation could be a desire by the new administration to reward the Algerians for their help in securing release of the American hostages in Iran. But there is a limit to American gratitude.
"We could never negotiate an uneconomic price out of gratitude, because it wouldn't get approved in the regulatory process," said Edward Vilade, a DOE official.
The Algerians are believed to be holding out for a price that would exceed $5 per million btu -- higher than the cost of importing pipeline gas from Mexico and Canada.
El Paso is pushing for a quick resolution -- sign up or ship out -- because it has delayed closing its book on the fourth quarter of 1980. Travis Petty, El Paso's board chairman,said last week "the company has suffered losses of approximately $7 million a month" since last April, and "if the next meeting fails to produce an acceptable agreement," El Paso is prepared to write off about $375 million and get out ot the LNG transporting business.
Most of its investment is in six tankers, which were built at a cost of about $900 million and were designed especially to carry the volatile LNG at cyrogenic temperatures.(LNG is natural gas that is compressed, cooled and condensed into a liquid for easier shipment. Natural gas becomes liquefied when its temperaure is lowered to minus 260 degrees Fahrenheit, at which point it requires only 1/600th of the volume of its gaseous state, making international transport economical.)
The tankers, each the size of the Queen Elizabeth II, have been compared to huge floating thermos bottles, but they are worth much less than their original cost if they are used as general cargo ships.
THE LNG orignates in a giant natural gas field at Hassi R'mel, Algeria, is liquified at the North Africa port of Arzew, and then pumped into the giant tankers for the nine-day 4,000-mile trip across the Atlantic to two East Coast ports, Cove Point and Elba Island near Savannah, Ga., where it was unloaded at a rate of 700 million cubic feet a day.
At Cove Point, the larger of the two terminals, the LNG is unloaded at a platform off shore and pumped 6,400 feet through a tunnel to four storage tanks, each large enough to supply the gas needs of 8,000 homes for a year.
Before leaving here, the LNG is converted back to natural gas, and then is pumped 87 miles through a 36-inch diameter pipeline to a measuring station west of Dulles Airport in Loudoun County, Virginia. From there, Columbia and its partner in the Cove Point terminal, the Consolidated Natural Gas Co., move the gas through their lines to customers in seven states. Between them, they serve seven million, or 15 percent, of the gas customers in the nation. Columbia's customers include the Washington Gas Light Co., Baltimore Gas & Electric Co. and several retailers in Ohio.
Some U.S. officials, such as Sen. Howard M. Metzenbaum (D-Ohio), think the U.S. should not be buying Algerian gas at all.
Metzenbaum, chairman of the Senate subcommittee on antitrust, monopoly and business rights, doesn't believe the Algerian gas is needed, especially since the price of U.S. natural gas has been deregulated, and sprawling new fields have been discovered in Alaska, Canada and Mexico.
Columbia's experience in the past 10 months would appear to support that contention. A spokesman said it has continued to supply its customers by transferring gas from other terminals in its own system, and has contingency plans to buy from other companies, although so far it hasn't needed to do that. pColumbia's need for Algerian LNG is long-range, the spokesman explained.
In a letter to then-Energy Secretary Charles W. Duncan Jr., last Oct. 17, Metzenbaum wrote that "that proposed contract is contrary to the best interests of the American people in general and of the people of Ohio in particular. It will serve as a precedent for domestic producers to seek ever-higher prices and for other pending cases. There is absolutely no sound reason to give in to Algeria on this matter, for we get neither security nor a good business deal, and our balance of payments is inevitably worsened."
Metzenbaum also raised a longstanding concern about the safety of LNG.As far back as 1944, he noted, 128 people were killed when LNG exploded in a plant in Cleveland, and on Oct. 6, 1979, a worker was killed in a blast at Cove Point.
The plant here was shut down by the Federal Energy Regulatory Commission while both FERC and Congress investigated the cause. Critics warned that the plant's location, within three miles of the Baltimore Gas & Electric Co.'s nuclear power plant at Calvert Cliffs, posed a potential doomsday diaster.
It was last April 16 -- six days after the last tanker arrived at Cove Point -- before the National Transportation Safety Board finally ruled on the cause. It said a loose pump seal had allowed gas to escape, vaporize and travel through a pipe into an elecrical substation, where a spark from a circuit breaker, thrown by a worker to shut down the pump, caused the explosion.
Neither Columbia nor El Paso has laid off any of its workers here, saying they are anxious to retain the highly trained technicians in the event shipments LNG resume. Columbia has reduced employment from 125 to 113 via attrition, and El Paso's crew at its nearby marine terminal at Ship Point has been cut from 84 to 49 by resignations and retirements during the 10-month work lull.
So the mini-boom which came to rural Calvert County with the opening of the Cove Point terminal in March, 1978 and the Calvert Cliffs' nuclear power plant is unaffected. At the Frying Pan restaurant in Lusby, midway between the two plants, the luncheon menu features such up-town prices as a luncheon steak at $5.50 and a plate of fried bay oysters at $6.75.
And at Ship Point, a few miles south of here, a sign at the gate of El Paso's marine terminal warns, in Norwegian, French, Arabic and English, "alcoholic beverages not allowed beyond this point or on LNG carriers."